Taiwan's central bank is consideringproposals to ease currency restrictions to reduce foreign
exchange reserves of 51 billion U.S. Dlrs, a local newspaper
reported today.
    The China Times, which has close ties with the government,
quoted central bank governor Chang Chi-cheng as saying the
government had agreed in principle to liberalise financial
restrictions.
    The bank was considering proposals to allow firms and
individuals to hold foreign exchange and invest in foreign
stocks for the first time, Chang was quoted as saying.
    All foreign exchange must now be handed to local banks and
exchanged for local currency. Firms and individuals may only
invest in foreign government bonds, treasury bills and
certificates of deposit.
    Central bank and other government officials were not
available to comment on the report.
    Economists said it was likely that the government would
ease foreign exchange controls, but only gradually.
    They said vast foreign currency reserves, earned mainly
from huge trade surpluses with the United States, made Taiwan a
target for U.S. Protectionism.
    Taiwan's trade surplus with the U.S. Rose to 13.6 billion
U.S. Dlrs last year compared with 10.2 billion in 1985.
    "The central bank has to go in this direction," said Su
Han-min, chief economist with the International Commercial Bank
of China. "If they don't quicken the pace, Washington could
retaliate and really damage Taiwan."
 REUTER
