Taiwan Is Doing Everything Possible to Avoid Negative Yields
- Central bank withdrew liquidity as rates fell to record low
- Exchange has reviewed its capacity to handle sub-zero yields
This article is for subscribers only.
As the world’s pile of negative-yielding debt rose to a record $18 trillion in December, authorities in Taiwan were working hard to keep the government’s bond yield above zero.
That month, the central bank sold a net $14 billion worth of certificates of deposit to commercial lenders, the most since early 2012. Its issuance helped mop up liquidity by tying up excess cash in the financial system. Had the central bank not stepped in and done this, “Taiwan government bond yields would have already gone negative some time ago,” said Baker Tu, a bond trader at Capital Securities Corp.