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Chinese yuan operations to begin in Taiwan

2013/01/08 18:31:36

Taipei, Jan. 8 (CNA) The China-based People's Bank of China is to sign a pact with the Bank of China's Taipei branch to clear Chinese yuan transactions in Taiwan, meaning that Taiwanese people will be able to invest in yuan-denominated assets, Taiwan's central bank said Tuesday.

Once the clearing pact is signed between the two Chinese banks, yuan-denominated operations such as yuan deposits, loans and remittances, can begin within a month, central bank officials said.

Asked whether Taiwan will receive higher status than Hong Kong as a Chinese offshore banking unit, central bank officials said they will seek better treatment or at least a comparable level of treatment to Hong Kong.

Currently, only offshore banking units are allowed to conduct yuan-denominated businesses.

The Hong Kong Monetary Authority stipulates that a maximum daily quota for yuan deposits is 20,000 yuan (US$3,212), with daily remittances to other accounts capped at 80,000 yuan.

Taiwan's and China's monetary authorities signed a landmark cross-Taiwan Strait currency clearing deal Aug. 31 last year, specifying that each side will pick a clearing bank to handle direct yuan conversions.

Under the deal, both sides can freely conduct currency exchanges between the Chinese yuan and the Taiwan dollar, which will cut foreign exchange costs by avoiding the default exchange process of first having to convert the currencies into U.S. dollars.

The deal will also allow local banks to accept yuan deposits and give out yuan loans, according to the central bank.

Taiwan appointed Bank of Taiwan's Shanghai branch in September last year as the clearing bank for handling transactions in Taiwan dollars in China, while in December, China appointed Bank of China's Taipei branch as the clearing bank for handling transactions in yuan in Taiwan.

(By Kao Chao-fen and Ann Chen)