China’s central bank has appointed the Taipei branch of Bank of China Ltd (中國銀行) as a clearing bank for yuan trading in Taiwan, three months after its Taiwanese counterpart chose the Bank of Taiwan’s (台灣銀行) Shanghai branch to offer New Taiwan dollar clearing services in China
The two banks selected as currency settlement banks will still need to be approved by the authorities on both sides.
“This is a breakthrough for the establishment of a cross-strait currency clearing mechanism and important progress for Bank of China to accelerate its business in cross-border yuan clearing and settlement,” the People’s Bank of China (中國人民銀行) said in a statement posted on its Web site yesterday.
The statement did not elaborate on when the Taipei branch of Bank of China will begin the yuan clearing service.
The latest move came after the two sides across the Taiwan Strait inked a memorandum of understanding on a currency clearing agreement on Aug. 31, as trade ties between the two countries increase.
The agreement also paves the way for yuan-based financial products and services that have increased in demand lately, while Taiwan is aiming to become an offshore trading hub for the yuan in competition with both Hong Kong and Singapore.