What Happened?
Recently, the rapid fluctuations of the New Taiwan Dollar (NTD) exchange rate have triggered panic and impacted businesses, highlighting the inadequacy of the central bank’s policies in addressing exchange rate volatility. It also underscores the need to enhance the “financial resilience” of Taiwan’s financial system under high-pressure circumstances (for example, issues with bank apps). Ge Ru-jun believes that Taiwan’s current foreign exchange reserves are highly reliant on a single currency, lacking mechanisms to diversify risks. It is advisable to consider incorporating digital assets such as Bitcoin into foreign exchange strategic reserves to mitigate risks and enhance response capabilities, countering the central bank’s argument of volatility as a reason to reject Bitcoin.
International trends, such as discussions and legislation in some U.S. states to include Bitcoin in reserves, as well as South Korea’s plan to open Bitcoin ETFs, emphasize that digital assets are a significant direction in global finance. The Taiwanese government should accelerate the promotion of digital financial transformation (such as blockchain and stablecoin applications) and strive to become a leader in digital asset reserves in Asia.
Banks’ Apps Cripple Trading: Taiwan’s Financial Resilience Under Test
Recently, the NTD exchange rate experienced extreme fluctuations akin to a “roller coaster,” with daily appreciation and depreciation reaching as high as 5%, even briefly touching 28.812 NTD. This has triggered market panic, substantial pressure on businesses for currency exchange, and public dissatisfaction. Kuomintang legislator Ge Ru-jun recently posted on Facebook, stating that the recent dramatic fluctuations in exchange rates have exposed structural issues of policy ineffectiveness and insufficient financial resilience within the central bank.
Ge Ru-jun analyzed that while the appreciation of the NTD may attract foreign capital in the short term, it conceals significant risks. He is concerned that foreign investment may consist of “hot money” seeking to capitalize on the appreciation. Once the positive news is exhausted and the exchange rate reverses, there is a high likelihood that profits will be quickly realized, leaving a hollow capital market and damaged local industries. He cited an example from his shopping experience at a 3C store, where the operator reported that due to the bank app’s failure, they were unable to process card payments or mobile banking transfers throughout the day. This indicates that under high-pressure currency exchange situations, Taiwan’s financial system not only proves that “financial diversification” is merely a slogan, but also that “financial resilience” can falter quickly. The export profits of small and medium-sized enterprises could be entirely consumed by such drastic exchange rate fluctuations, potentially leading to losses of up to 7%.
In the face of this unprecedented situation and the fragility of the financial system, Ge Ru-jun strongly urges the government to recognize the urgency of “digital financial transformation” and to review financial reserve strategies. He pointed out that Taiwan’s foreign exchange reserves are currently highly concentrated in a single sovereign currency, lacking diversified hedging mechanisms, resulting in an extremely high concentration of risk. The excessive reliance on U.S. dollar-based financial reserve strategies has repeatedly been raised in general inquiries, highlighting the lack of diversified resilience.
The U.S. and South Korea Actively Embrace Digital Assets! Taiwan’s Strategic Layout Must Not Fall Behind
Regarding foreign exchange strategic reserves, Ge Ru-jun suggested evaluating the inclusion of Bitcoin and other diverse assets. He criticized the central bank for rejecting Bitcoin’s inclusion in reserves this March on the grounds of “high volatility,” while noting that the recent volatility of the NTD is nearly three times that of Bitcoin, which appears contradictory and self-defeating. He believes that the government and the central bank should discuss incorporating Bitcoin as part of strategic reserves to address potential future risks from global currency, geopolitical, or technological disasters.
Ge Ru-jun mentioned that 28 states in the U.S. are discussing strategic reserves involving Bitcoin, with 18 states actively promoting it. He cited recent developments, noting that after the Arizona House passed relevant legislation (though vetoed by the governor), New Hampshire has become the first state in the U.S. to pass legislation for “strategic Bitcoin reserves,” allowing up to 5% of total state funds to be allocated to Bitcoin, which has already been signed into law by the governor. This signifies that Bitcoin is no longer just a speculative tool but a reserve asset with systemic significance. Taiwan should take inspiration from international examples to establish a digital asset reserve system that suits its national conditions.
In addition to strategic reserves, Ge Ru-jun is also actively promoting digital financial applications. He called for the acceleration of blockchain technology and stablecoin applications to connect with global trends, enabling enterprises to achieve low-cost, high-efficiency on-chain settlement mechanisms for cross-border currency exchange, thereby enhancing financial resilience. He also mentioned past initiatives to allow qualified investors to purchase Bitcoin ETFs through delegated investment, and how the Financial Supervisory Commission previously used South Korea’s ban as an excuse. However, it has now been reported that South Korea’s ruling party plans to open Bitcoin ETFs, which not only undermines the FSC’s previous excuses but also shows that the world is accelerating its embrace of digital assets. He praised the current head of the FSC for being open-minded and willing to take the lead over South Korea.
Ge Ru-jun emphasized that Taiwan has a significant opportunity to be the first in Asia to implement a “Bitcoin strategic reserve.” He used Taiwan’s 500 billion U.S. dollar foreign exchange reserves as an example, stating that even a mere 1% allocation would amount to a strategic layout of 5 billion U.S. dollars, allowing Taiwan to seize the initiative in the global digital currency competition. He urged, “If we don’t act now, we will regret it tomorrow!” In the face of various countries competing for strategic layouts, Taiwan can no longer afford to delay.
Finally, Ge Ru-jun called for the government to convene a cross-departmental meeting to clarify the supervisory responsibilities for stablecoins and digital assets, avoiding a situation where policies lead to “each speaking for themselves, with no one responsible.” He believes that a more diversified strategic reserve is a response to the current crisis and an investment in future economic security. The government should no longer be an obstacle to diversified reserves and digital transformation but should take bold steps forward to become a leader in financial innovation, guiding small and medium-sized enterprises and industries to meet the challenges of the new era.