TAIPEI: Taiwan's central bank is pushing for curbs to be imposed on the amount of mainland capital that can be placed in local stocks, hoping to stem the inflow of speculative funds, an official said yesterday.

The Financial Supervisory Commission, which has the authority to set limits on mainland funds, has been approached by central bank officials eager to keep controls tight, said Lu Ting-chieh, the commission's chief secretary.

"The central bank has expressed the hope to us that we will cut the investment amount," Lu told AFP.

Mainland institutional investments in stocks are expected soon after January 16, when three financial memoranda signed by Taipei and Beijing in November take effect.

Among the memoranda is one that for the first time allows mainland investors to place funds in Taiwan's stock markets.

The commission had initially set the maximum for mainland institutional investments at an overall total of $1 billion, but the central bank's recent approaches indicate it considers this amount too large.

The Taipei-based Economic Daily News reported yesterday the central bank's move to cut the investment amount aims to curb market speculation amid fears that a massive entry of overseas funds will destabilize the Taiwan dollar.

China Daily/AFP

(HK Edition 01/12/2010 page2)