Onshore yuan-denominated deposits are expected to account for 5 percent of total deposits in two years following the establishment of a currency clearing mechanism across the Taiwan Strait, an official of the Bankers Association of the Republic of China (銀行公會) said on Wednesday.
Derek Chang (張雲鵬), head of the association’s international financial committee, made the forecast at a banking forum organized by the Financial Supervisory Commission, according to a statement released by the commission on its Web site.
Chang said after a cross-strait currency clearing mechanism comes into force, allowing full convertibility between the New Taiwan dollar and the yuan, the designated banking units in Taiwan would see huge opportunities in yuan-related businesses, including deposits, loans and remittances.
Yuan deposits will account for 5 percent of the total number of deposits in the first two years, Chang said, adding that yuan deposits in Hong Kong have so far reached 600 billion yuan, or 10 percent of the total, since 2004.
Chang, also an executive vice president of Hua Nan Commercial Bank (華南銀行), said besides yuan deposits he expects financial institutions to introduce derivatives based on the currency.
Taiwan and China signed a memorandum of understanding on Aug. 31 to set up a cross-strait currency clearing mechanism. On Tuesday, the central bank announced it had selected Bank of Taiwan (台灣銀行) as the clearing bank for NT dollar transactions in China, while China has not yet decided which bank will clear yuan transactions in Taiwan.