China hopes to usher in direct convertibility between the New Taiwan dollar and the yuan as soon as possible, visiting Deputy Governor of the People’s Bank of China Hu Xiaolian (胡曉煉) told a seminar in Taipei yesterday.
“We hope [a currency-clearing] mechanism will be in place before a cross-strait economic cooperation framework agreement [ECFA] is inked,” the Chinese monetary regulator told the 15th cross-strait financial academic seminar yesterday.
“We’re still working on technical complications, such as transporting money, opening accounts among [commercial] banks [across the Taiwan Strait] and statistics matters, the majority of which, fortunately, have been resolved,” Hu told reporters on the sidelines of the seminar.
She refused to set a timetable.
Cash exchanges between the currencies should be the priority once these technical issues are resolved, said Hu, who is heading a banking delegation from China on a six-day visit.
Banks from both sides can later discuss the possibility of launching deposit or wire-transfer services in each other’s currency, she said.
The details concerning cash exchanges can easily be resolved in time for the planned ECFA if the market access issue alone is addressed, she said.
“Cash exchanges can be facilitated before Chinese banks set up operations in Taiwan, although it would be more convenient for them if they had Taiwan-based outlets,” she said.
The state-run Bank of China (中國銀行) will likely be the major clearing bank on China’s side since it is experienced in foreign exchange and has outlets overseas, Hu said.
In response, Bank of Taiwan (台灣銀行) chairwoman Susan Chang (張秀蓮) yesterday said that her bank was almost ready to start cash exchanges and was waiting for the go-ahead from regulators across the Strait.
“Once we get the green light, it will only take us two to three months’ time to launch the exchange services,” Chang told reporters on the sidelines of yesterday’s seminar.
Exchanges between the NT dollar and the yuan are currently done in Hong Kong via the US dollar.
Bank of Taiwan and Mega International Commercial Bank (兆豐國際商銀) are likely to be the major clearing banks on Taiwan’s side.
Taiwan central bank Governor Perng Fai-nan (彭淮南) told the legislature two weeks ago that he believed the currency-clearing mechanism could only be addressed once the financial memorandum of understanding (MOU) takes effect next month.
The mechanism may be further delayed until an ECFA is signed after a legislative resolution urged the Financial Supervisory Commission to bar Chinese banks from operating NT-dollar-denominated businesses unless China relaxes similar restrictions, Perng said.
Taiwanese banks will not be allowed to offer yuan-denominated services in China until they have operated branches there for three years.
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