Ex-Central Bank Deputy Governor Criticizes Government’s Monetary Policy

Ex-Central Bank Deputy Governor Criticizes Government’s Monetary Policy

Source: Taipei newspapers   May 14, 2012

In an economic symposium in Taipei on May 12, Shea Jia-dong (許嘉棟), a former deputy governor of the Central Bank (1996-2000) and currently chairman of the Taiwan Academy of Banking and Finance (TABF,台灣金融研訓院), criticized the Central Bank for its tendency toward adopting an expansionary monetary policy in order to pursue profits for itself. In response, Central Bank governor Perng Fai-nan (彭淮南), said that the Central Bank’s monetary policies were in accordance with the four management objectives stipulated in the Central Bank Act (中央銀行法), adding that  Shea’s remarks were regrettable.      
 
On May 12, the Economics Department of National Taiwan University (NTU) and the TABF co-hosted an economic symposium titled “Professor Wang Tso-jung (王作榮) and National Development.” 【Editors Note: Wang was a former President of the Control Yuan and a prestigious economics professor at NTU.】 Many economics and finance officials and scholars, including Central Bank governor Perng Fai-nan, were invited to the symposium. When asked by the media about the government’s proposal to impose a capital gains tax on stock transactions, Perng declined to comment.    
 
Wu Chung-shu (吳中書), president of the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院), delivered a report titled “Monetary Policy and Economic Development” at the symposium, and former Central Bank deputy governor Shea served as a discussant. 
 
In response to the accusation that he had his eye on the post of Central Bank governor as Perng’s five-year term expires in February 2013, Shea said that the allegation was completely unfounded. When talking about the Central Bank’s monetary policy, he said that the Central Bank currently had a tough job. He suggested that the Central Bank accumulate less foreign currency reserves, adding that it would not be a good thing if the Central Bank’s goal was to pursue profits for itself because this would lead to expansionary monetary policies.       
 
Upon hearing Shea’s comments, Central Bank governor Perng, who was sitting in the audience, immediately grabbed a microphone and responded by saying, “The Central Bank’s management objectives are stipulated in The Central Bank Act, including the promotion of financial stabilization, the soundness of the banking industry, and maintenance of stable currency values. In addition, the Central Bank’s job is to assist economic development with the abovementioned objectives. The Central Bank Act does not stipulate how much profit the Central Bank should hand over to the national coffers.” 
 

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