The central bank yesterday said local banks have ample channels to deal with the Chinese yuan deposits they receive in Taiwan and make them flow back to China.
The bank’s clarification was in response to a story published by the Chinese-language Liberty Times, (the Taipei Times’ sister newspaper), yesterday.
The story cited remarks by Academia Sinica research fellow Shih Jun-ji (施俊吉) that the central bank failed to build up abundant channels for the flow of Chinese yuan back to its onshore market before allowing local banking units (DBUs) in Taiwan to operate yuan deposit business.
“Changing Chinese yuan deposits they receive to the Bank of China’s [BOC, 中國銀行] Taipei branch is only one of various channels for local banks,” the central bank said in a statement.
BOC’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 April, yuan deposits in the domestic banking system reached 287.54 billion yuan (US$46.31 billion) — 227.61 billion yuan at DBUs and 59.93 billion yuan at offshore banking units (OBUs), central bank data showed.
Other than changing yuan deposits to BOC’s Taipei branch, the central bank said domestic banks have the other six measures: lending or depositing them to banks of other countries, paying or settling cross-national trades by yuan deposits, helping customers remit money denominated in yuan to China, investing in interbank bond market, purchasing yuan-denominated bonds and operating yuan-loaning business.
The central bank did not deny Shih’s forecast that BOC’s Taipei branch may post the highest net profit among Taiwan’s banks next year, on the back of a preferential interest rate spread the bank enjoys when changing a large amount of yuan deposits it receives in Taiwan back to China.
However, the BOC’s Taipei branch has to submit the corresponding income tax in Taiwan based on its profitability, the statement added.
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