Entry into the WTO and Taiwan's Financial Internationalization

Abstract

Over the years, Taiwan has made great progress in financial internationalization. At the same time, foreign exchange controls have been relaxed significantly and restrictions on capital movements have been lifted in a gradual and orderly manner. Taiwan has also been actively developing itself into an Asia-Pacific financial center since 1995. When both sides of the Taiwan Strait enter the WTO in the future, they will have to address the new conditions of opening up domestic markets and competition from international businesses. Actually, there are some issues concerning financial internationalization after Taiwan's accession in the WTO. They are appropriate capital account management, increasing cross-Strait financial activities and maintaining financial discipline and emphasize risk management. In order to maintain financial discipline, the monetary authorities should strengthen financial supervision, by conducting on-site and follow-up examination of financial institutions. On the other hand, financial institutions should abide by the rules of the game and should especially emphasize risk management. Taiwan and mainland China are expected to enter the WTO at the same time in the near future. In order to promote international stability, it is an opportunity for the two sides of the Taiwan Strait to work together toward establishing an East Asian financial cooperation mechanism.