The much-awaited set of new regulations governing cross-strait market access for the banking, securities brokerage and insurance sectors announced by the Financial Supervisory Commission on Tuesday showed that the financial regulator has taken public concerns to heart.
However, as any market-access deal takes two to tango, there is bound to be uncertainty over whether President Ma Ying-jeou’s (馬英九) administration will stick to its bottom line and refrain from making concessions in the upcoming negotiations over a proposed economic cooperation framework agreement (ECFA) with China, during which further relaxations of financial rules may be agreed upon.
From the Taiwanese side, to ease concerns that the Taiwanese banking sector may use local deposits to fund its loan businesses in China, the commission’s new regulations stipulate that half of the loans to be granted by the banks’ to-be-established outlets in China will have to come from Chinese depositors. The commission has also placed a cap on each Taiwanese bank’s China-bound investment at less than 15 percent of a bank’s net worth or 10 percent of a financial service provider’s net worth.
All of this means that the capital outflow of 14 Taiwanese banks to China will be capped at NT$25 billion (US$785 million), while that of 13 financial service providers will not exceed NT$50 billion.
To a certain degree, both rules aim to put a brake on the acceleration of China-bound capital flight within the banking sector, which was previously barred from branching into China.
This contrasts with earlier estimates by China Development Industrial Bank president Simon Dzeng (曾垂紀), at the time executive vice president at Mega Financial Holding Co, that once the government gave the green light, most domestic banks would move into the Chinese market “within three months,” resulting in a fund outflow of as much as NT$300 billion.
However, we shouldn’t expect the banking sector to be satisfied with the new regulations. It is very likely that it will push for more open policies before the government sits down with its Chinese counterparts.
Meanwhile, the commission has opened the door just a little for Chinese banks wishing to branch into Taiwan. Chinese banks will remain barred from setting up subsidiaries here and will have to wait two years before they can upgrade their representative offices into branches.
In terms of share investments, Chinese financial institutions will not be allowed to own more than 10 percent of a Taiwanese rival’s stock, although the regulator has said it would further relax, “in a progressive manner,” such rules after — and if — an ECFA is signed.
Many Chinese banks have made it clear they have no interest in single-digit holdings in Taiwanese banks, as Taiwanese banks are already allowed to take up stakes of up to 20 percent in Chinese banks via overseas outlets.
It does appear that the new regulations were baby steps that will please nobody. This said, we must hope the government will remain steadfast and refrain from making careless moves when it negotiates with the Chinese government on further market access. When dealing with Beijing, baby steps might just be advisable.
“Si ambulat loquitur tetrissitatque sicut anas, anas est” is, in customary international law, the three-part test of anatine ambulation, articulation and tetrissitation. And it is essential to Taiwan’s existence. Apocryphally, it can be traced as far back as Suetonius (蘇埃托尼烏斯) in late first-century Rome. Alas, Suetonius was only talking about ducks (anas). But this self-evident principle was codified as a four-part test at the Montevideo Convention in 1934, to which the United States is a party. Article One: “The state as a person of international law should possess the following qualifications: a) a permanent population; b) a defined territory; c) government;
The central bank and the US Department of the Treasury on Friday issued a joint statement that both sides agreed to avoid currency manipulation and the use of exchange rates to gain a competitive advantage, and would only intervene in foreign-exchange markets to combat excess volatility and disorderly movements. The central bank also agreed to disclose its foreign-exchange intervention amounts quarterly rather than every six months, starting from next month. It emphasized that the joint statement is unrelated to tariff negotiations between Taipei and Washington, and that the US never requested the appreciation of the New Taiwan dollar during the
Since leaving office last year, former president Tsai Ing-wen (蔡英文) has been journeying across continents. Her ability to connect with international audiences and foster goodwill toward her country continues to enhance understanding of Taiwan. It is possible because she can now walk through doors in Europe that are closed to President William Lai (賴清德). Tsai last week gave a speech at the Berlin Freedom Conference, where, standing in front of civil society leaders, human rights advocates and political and business figures, she highlighted Taiwan’s indispensable global role and shared its experience as a model for democratic resilience against cognitive warfare and
The diplomatic spat between China and Japan over comments Japanese Prime Minister Sanae Takaichi made on Nov. 7 continues to worsen. Beijing is angry about Takaichi’s remarks that military force used against Taiwan by the Chinese People’s Liberation Army (PLA) could constitute a “survival-threatening situation” necessitating the involvement of the Japanese Self-Defense Forces. Rather than trying to reduce tensions, Beijing is looking to leverage the situation to its advantage in action and rhetoric. On Saturday last week, four armed China Coast Guard vessels sailed around the Japanese-controlled Diaoyutai Islands (釣魚台), known to Japan as the Senkakus. On Friday, in what
RSS