Shadow FX intervention in Taiwan – Current Account surpluses & the Rise of Life Insurers

This is the second and third chapter in a series on Taiwan’s life insurers and their private & sovereign FX hedging counterparties. It’s the product of a collaboration with Brad Setser of the Council on Foreign Relations.

Chapter II. focuses on Taiwan’s Balance of Payments and the transition from the central bank to the life insurance industry recycling the country’s large current account surpluses. A deep dive of lifers’ management of their vast overseas fixed income books follows, with a special eye on the FX risk they lay off in FX derivative markets.

Chapter III. is a quick primer on the instruments most commonly used by institutional investors to manage FX risk, ahead of more technical chapters next week.

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Shadow FX intervention in Taiwan – Current Account surpluses & the Rise of Life Insurers

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