More than 80% of Taiwan’s foreign exchange reserves are allocated to U.S. Treasury bonds! Lin Dai-hua blasts “People’s money for survival turned into another country’s IOU” The central bank submitted a report two weeks later

Taiwan’s foreign exchange reserve allocation has once again become the focus of political sparring in the Legislative Yuan. In recent questioning at the Financial Affairs Committee, Legislator Lin Dai-hua stated plainly that foreign exchange reserves are “Taiwanese people’s life-saving money,” yet the central bank has invested more than 80% of its assets in U.S. Treasury bonds, which is tantamount to holding a large number of “IOUs from other countries.” She warned that overly concentrated asset allocation could increase risk. She noted that over the past two years, international gold prices have risen significantly; while central banks around the world have continued to add gold for hedging, Taiwan’s gold holdings have long failed to show any obvious adjustment. She criticized that the reserve strategy lacks flexibility and is difficult to respond to changes in the global situation.

(Gefter Tsui discusses how to use U.S. dollar stablecoins for foreign exchange reserves; Central Bank Governor Yang Chin-long briefly said, “Time and circumstances will change.”)

Lin Dai-hua asked the central bank to re-examine its allocation strategy, strengthen risk diversification, and avoid concentrating assets excessively in a single underlying item. Central Bank Governor Yang Chin-long responded that within two weeks, he would submit a related assessment report and conduct a review regarding lowering the concentration of holdings in U.S. Treasuries and whether to increase gold allocation.

Over 80% of foreign exchange allocated to U.S. Treasuries—Lin Dai-hua: “People’s life-saving money” buys “IOUs from other countries”?

In recent questioning at the Financial Affairs Committee, Legislator Lin Dai-hua of the Democratic Progressive Party said outright that foreign exchange reserves are “Taiwanese people’s life-saving money,” but the central bank has invested more than 80% of its assets in U.S. Treasury bonds, which is tantamount to holding a large number of “IOUs from other countries.” She pointed out that over the past two years, international gold prices have risen significantly; central banks across the world have continued to increase their gold holdings for hedging, but Taiwan’s gold holdings have long not shown any obvious adjustment. She criticized that the reserve strategy lacks flexibility and is difficult to cope with changes in the global situation.

Lin Dai-hua urged the central bank to re-check its allocation strategy, strengthen risk diversification, and avoid over-concentrating assets in a single underlying item. Central Bank Governor Yang Chin-long responded that within two weeks, he will submit a related assessment report to review efforts to reduce the concentration of U.S. Treasury holdings and whether to increase gold allocation.

U.S. Treasuries lean toward returns and stability; gold leans toward hedging and value storage

In terms of asset characteristics, the U.S. dollar, U.S. Treasuries, and gold play different roles within each country’s central bank reserve system. As the world’s primary reserve currency, the U.S. dollar has the highest liquidity and international payment capability. U.S. Treasuries are dollar-denominated, fixed-income assets with fixed returns and high credit ratings; they provide stable interest income and safety. For this reason, they have long been regarded as a core allocation for central banks.

By contrast, gold has no yield, but when inflation rises or during financial turmoil, it is often viewed as a hedging asset against currency depreciation and systemic risk. In other words, U.S. Treasuries are more about “returns and stability,” while gold is more about “hedging and value storage.” Together, the two have a complementary relationship within the reserve system.

Netizens: Central bank decision-making involves professional judgment—we should maintain independence

Related issues have also sparked heated debate on social media. Some voices support Lin Dai-hua’s call to diversify risk, saying that for a long time the central bank’s strategy has been overly conservative, lacking transparency, and should be adjusted to respond to changes in the global financial environment. However, many others questioned it as well, saying that the central bank is not an investment institution seeking returns in essence, but rather prioritizes a stable currency and the financial system; therefore, holding large amounts of U.S. Treasuries is a reasonable allocation.

Netizens pointed out that as the most liquid and creditworthy fixed-income asset globally, U.S. Treasuries can provide stable interest income and safety, making them difficult to replace with other assets. By contrast, gold prices can fluctuate just as sharply and it provides no yield; chasing it by buying at high prices could actually increase risk.

In addition, some viewpoints argue that whether it is U.S. Treasuries or gold, each comes with its own risks—such as long-term currency depreciation or price pullbacks. The core issue is not the choice of a single asset, but whether overall allocation is excessively concentrated. One netizen said that central bank decision-making involves professional judgment and institutional design, so it should maintain independence and not end up as a tool for political standoffs. Others criticized that current policy discussions are drifting into emotion and confrontation, lacking a basic understanding of how financial markets operate.

This article, “Taiwan—More than 80% of foreign exchange bets on U.S. Treasuries! Lin Dai-hua slams ‘people’s life-saving money’ turning into ‘IOUs from other countries’; central bank to submit a report within two weeks,” was first published on Chain News ABMedia.