Tue, Apr 22, 2014 - Page 14 News List

Central bank rules out BOC conjecture

REPATRIATION:The fast-growing scale of NT dollar assets at BOC in Taipei has raised concern over the lack of channels for the flow of yuan back to China

By Amy Su  /  Staff reporter

The central bank yesterday denied online speculation that Bank of China’s (BOC, 中國銀行) Taipei branch is holding NT$1.25 trillion (US$41.3 billion) in cash denominated in New Taiwan dollars that is set to be used by potential Chinese investors to buy Taiwanese companies.

“As of the end of last month, BOC’s Taipei branch only had NT$12.5 billion in assets denominated in the NT dollar,” the central bank said in a statement.

Bank of China’s branch in Taipei has been the clearing bank for the yuan in Taiwan since domestic banks started conducting yuan-based business in February last year.

As of the end of last month, yuan deposits in the domestic banking system reached 268.39 billion yuan (US$43.14 billion) — 211.86 billion yuan at domestic banking units (DBUs) and 56.53 billion yuan at offshore banking units (OBUs), central bank data showed.

Local DBUs and OBUs may use yuan-denominated deposits to make loans to their domestic and overseas customers, or for bank-to-bank lending and bond purchases, by depositing them with BOC’s Taipei branch.

The central bank said that potential Chinese investors in Taiwan needed to submit proposals and receive permission from the Ministry of Economic Affairs’ Investment Commission before making an investment.

Since the government relaxed the regulations covering Chinese investments in 2009, a total of 504 investment proposals from China have received permission, with the total amount of investment standing at US$870 million, the central bank’s statement said, citing Investment Commission data.

Even so, the fast-growing scale of NT dollar assets at BOC’s Taipei branch has raised concern over the lack of channels for the flow of yuan back to its onshore market, the Chinese-language Liberty Times (the Taipei Times’ sister paper) reported.

BOC’s Taipei branch’s assets exceeded the NT$1 trillion mark earlier this year, compared with the NT$5.55 billion recorded in January last year, driven mainly by its clearing and settlement service for the yuan.

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