The Bank of Taiwan (台灣銀行) said on Saturday that it is planning to send a second batch of NT$25 million (U$833,300) in cash to China under the cross-strait currency clearing mechanism.
Before the Feb. 9 to Feb. 17 Lunar New Year holiday, the bank sent a first batch of NT$25 million to China, with most of the shipment in NT$2,000 notes.
Bank of Taiwan chairman Liu Teng-cheng (劉燈城) said the first batch has almost completely been put into circulation in China, prompting the need for a new batch.
Bank of Taiwan’s Shanghai branch was appointed last year by financial authorities in Taiwan to serve as the clearing bank for the NT dollar in China after Taipei and Beijing signed an agreement in August last year to put the currency clearing system in place.
Under the system, the Bank of Taiwan and the central bank have agreed to send NT$2 billion a year to China so that individuals and businesses there will not have to go through banks located in a third area, such as Hong Kong, to get Taiwanese currency.
Liu said that because China imposes foreign exchange controls, customers can only get NT dollars in cash at present, with the ceiling for exchanges of Chinese yuan into NT dollars set at NT$60,000.
The Taipei branch of Bank of China serves as the clearing bank for the yuan in Taiwan under the cross-strait currency mechanism amid closer business ties between Taiwan and China.
Domestic banking units (DBUs) of banks operating in Taiwan have been allowed to offer yuan-denominated services, such as deposits, loans and remittances, since Feb. 6 through clearing services provided by the Taipei branch of the Bank of China.
Before the cross-strait currency mechanism was established, only banks’ offshore banking units (OBUs) were allowed to engage in yuan-denominated services.
According to the central bank, yuan-denominated deposits at the DBUs of Taiwanese banks totaled 29.91 billion yuan (US$4.82 billion) as of Wednesday last week.
After including deposits held by the banks’ OBUs, Taiwan had a total of 60.26 billion yuan in deposits.