Exchange services for the Chinese yuan should be extended from Kinmen and Matsu to the rest of Taiwan to meet growing demand, said Perng Fai-nan (彭淮南), governor of the central bank, in the legislature yesterday.
"Now is the best time to open up the yuan exchange business nationwide," he said in response to Chinese Nationalist Party (KMT) Legislator Joanna Lei's (雷倩) question during a Finance Committee meeting.
China has refused to talk to Taiwan about a bilateral currency exchange mechanism.
Nevertheless the government opened Chinese yuan exchange services on Kinmen and Matsu, both of which lie close to China's Fujian Province, on Oct. 3 last year. The exchange rate was set in a range of NT$4.039 to NT$4.199 to 1 yuan on an experimental basis.
Six financial institutions in Kinmen and Matsu have been granted permission to offer the currency exchange service.
Perng said that as tourists are now allowed to bring 20,000 yuan in or out of the nation per trip, restrictions on yuan exchange might foster the blackmarket circulation of Chinese currency in Taiwan, endangering the New Taiwan dollar's status as the nation's currency.
"Introducing yuan exchange mechanisms throughout Taiwan will not have any adverse economic impact on the nation. But we still respect the Mainland Affairs Council's [MAC] decision on when this should happen," the governor said.
He said the central bank was fully prepared and could start exchanging money within a week if the council agreed to amend the regulations.
Commenting on Perng's remarks, Financial Supervisory Commission spokesperson Susan Chang (張秀蓮) said the commission respected the central bank's opinions.
The central bank would have looked into the matter thoroughly before making such proposals and local banks are sufficiently experienced in foreign exchange business to deal with any relaxation of regulations, Chang said.
According to Article 38 of the Statute Governing the Relations Between the People of the Taiwan Area and the Mainland Area (
Given the lack of such an agreement, it could be feasible to allow the exchange of Chinese currency in selected spots across Taiwan. The final decision on opening-up the situation depends on the central bank, Chang said.
The central bank's risk management system in terms of foreign exchange, including identification of counterfeit Chinese notes, is subject to its own regulations, she said.
Perng also defended the bank's better-than-expected profits as KMT Legislator Lai Shyh-bao (賴士葆) demanded that the bank's "low" government-set targets be raised.
By the end of last month, the bank had posted profits of NT$182.2 billion (US$5.6 billion), 159 percent of the budget target of NT$114.4 billion. Last year the bank's balance sheet showed a profit of more than NT$60 billion, for which Lai said the bank's target should be raised 30 percentage points to reflect reality.
But Perng said the bank's profits were subject to a high degree of uncertainty.
"The bank's revenues are heavily influenced by returns on foreign assets as factors like the level of foreign exchange reserves, interest rates and the NT dollar exchange rate affect revenues," Perng said.
On the other hand, Certificate of Deposit Issued and Redeposit of Financial
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