U.S. Continues Reign as Top Debtor to Taiwan's Banks for 38th Consecutive Quarter

Economic Shifts and Investment Patterns Drive Changes in Taiwanese Banking Exposure

Taipei, Taiwan – The United States has maintained its position as the largest debtor nation to Taiwanese banks, marking the 38th consecutive quarter at the close of 2024, according to the local central bank's latest data.

Figures released by the central bank revealed that Taiwanese banks' exposure to the U.S. reached US$176.997 billion by the end of 2024. This reflects a decrease of US$4.988 billion, equivalent to a 2.74 percent reduction, compared to the preceding quarter.

Hsieh Jen-chun (謝人俊), the deputy head of the central bank's Department of Financial Inspection, commented on the data, noting that economic uncertainties have led to increased caution among businesses, resulting in a slowdown in investments and borrowing activities.

Furthermore, Hsieh indicated that Taiwanese investors' rush to redeem investments in U.S. mutual funds also contributed to the reduced exposure.

At the end of 2024, the international claims held by Taiwanese banks on a direct risk basis, which encompass loans, investments, deposits, and other holdings, experienced an US$11.0 billion decrease from the previous quarter, settling at US$599.4 billion. This concludes a four-quarter period of continuous increases.

Hsieh attributed the overall decline in exposure across the local banking sector to a drop in interbank loans and the depreciation of non-U.S. dollar currencies relative to the U.S. dollar.

Hsieh explained that the exposure of Taiwanese banks, when denominated in non-U.S. dollar currencies, decreased when converted into U.S. dollars, as nearly all major currencies depreciated against the U.S. dollar during the fourth quarter of the previous year.

According to Hsieh, the South Korean won, the Australian dollar, the Japanese yen, the Euro, and the Chinese yuan saw decreases of 10.85 percent, 10.22 percent, 8.87 percent, 6.81 percent, and 3.88 percent, respectively, against the U.S. dollar.

China remained the second-largest debtor to the local banking system, with exposure totaling US$46.94 billion, a 2.75 percent decrease from the previous quarter.

Following the U.S. and China, Luxembourg secured the third position, with Taiwanese banks' exposure reaching US$44.20 billion at the end of December, showing a 0.92 percent decrease from the preceding quarter. Australia followed with US$37.86 billion (down 5.79 percent), and Japan with US$34.50 billion (down 2.84 percent).

Completing the top 10 were Hong Kong, with approximately US$31.82 billion in exposure at the end of December (down 1.15 percent), the United Kingdom at US$20.08 billion (down 2.34 percent), Singapore at US$17.80 billion (up 0.10 percent), South Korea at US$17.13 billion (down 0.76 percent), and France at US$15.83 billion (down 0.95 percent).

The combined exposure to these top 10 debtors totaled US$443.2 billion, constituting 73.93 percent of the overall international claims held by Taiwan's banks at the close of December, according to the central bank's report.