Taiwan Central Bank Scrutinizes Banks' TSMC Borrowing and Inverted Rates

Taiwanese banks have faced growing short-term funding pressure amid tax season, brisk stock-market trading and rising financing demand from the AI industry. TSMC's ample cash reserves and strong bargaining power have even made it a source of funds for banks. The practice could distort normal capital flows and interest-rate pricing, drawing scrutiny from the central bank.

Central Bank Governor Yang Chin-long confirmed that he had heard of banks tapping TSMC for liquidity and said he was puzzled that their borrowing rates were below market levels, creating an "interest-rate inversion." The central bank said it would continue monitoring distortions in financial markets. Reports did not specify the date of the transactions, the amounts borrowed, the banks involved or the actual interest rates.