TAIPEI (TVBS News) — Taiwan's massive exposure to American debt came under scrutiny Tuesday (April 15) when Central Bank Governor Yang Chin-long (楊金龍) revealed that approximately 80% of the island's foreign exchange reserves are held in U.S. Treasury bonds. During questioning at the Legislative Yuan (Taiwan's parliament), Yang disclosed that Taiwan ranks as the eleventh-largest foreign holder of American debt, with investments exceeding US$290 billion (NT$9.4 trillion), raising concerns about vulnerability to U.S. fiscal policies.
The hearing grew tense when Kuomintang (KMT, 國民黨) Legislator Cheng Cheng-chien (鄭正鈐), a member of Taiwan's main opposition party, pressed Yang about a scenario that has worried global financial markets: the possibility that Washington might compel foreign creditors to convert their holdings into 100-year zero-coupon bonds. Yang dismissed this hypothetical maneuver as tantamount to a sovereign default, while reassuring legislators that Taiwan's financial authorities maintain vigilant monitoring systems and flexible adjustment strategies to navigate risks associated with America's growing debt burden.
The central banker emphasized the pivotal role that U.S. Treasury securities play not only in Taiwan's reserves but in the global financial architecture. Yang warned legislators about the potentially catastrophic ripple effects that would follow an American default, explaining that U.S. government bonds serve as the fundamental benchmark for pricing countless financial products worldwide. This interconnectedness, he suggested, makes the stability of the U.S. debt market a matter of national economic security for Taiwan. ★