Capital Briefs: Privatization of Taiwan's Banks Seen in Peril

The threat of a military attack by China will jeopardize Taiwan's effort to open its state-run banking system to private and foreign institutions, an expert on the region told the House Banking Committee Wednesday.

"A protracted campaign over the rest of the year might seriously tax Taiwan's capabilities," said David N. Laux, president of the USA-Republic of China Economic Council.

House Banking Committee Chairman Jim Leach, R-Iowa, who called Wednesday's hearing on the Chinese banking system, said that because Taiwan has the world's second-largest foreign reserve holdings, estimated at about $90 billion, "any attack by the mainland would amount to a bank heist."

But William H. Overholt, president of Bankers Trust Co., Hong Kong, said there is little risk China will attack Taiwan or destroy the vibrant economy of Hong Kong.

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