But Lee also expressed concern over the yuan’s domestic supply if Chinese authorities fail to ensure a steady outflow of cash to Taiwan.
“There may be a chaotic period in the beginning as there will be more demand for the yuan than supply,” he said, adding that “hopefully, after Chinese tourists are allowed, they will bring in some cash supply.”
Lee, therefore, threw his support behind the central bank’s earlier two-phase proposal by adopting a one-way exchange first — allowing domestic banks to buy yuan bills and then open up the yuan’s full convertibility after China agrees to sign a currency-clearing pact.
A currency-clearing pact would be signed on a government-to-government basis to ensure the convertibility and supply of both countries’ currencies in their respective markets.
Yang Kung-yi (楊恭逸), a currency trader at Shanghai Commercial & Savings Bank (上海商業儲蓄銀行), also expressed a positive view toward the yuan policy since “the policy is less complicated and requires only a legal revision to facilitate.”
“And such a policy will meet part of people’s expectations on the new government’s polices of opening up toward China although its momentum to boost the local economy remains to be seen,” he said.
The convertibility’s impact on the foreign exchange currency in Taipei will be limited, he added.
Yang and Lee, however, expressed concerns over the possible circulation of fake yuan bills.
Lee urged the central bank to immediately plan training for bank employees to identify fake yuan bills, which takes time and skill, but could ward against crime and potential losses.
RSS