Sat, Jul 17, 2004 - Page 2 News List

Central Bank to rule on currency exchanges: MAC

MONEY Some restaurants are accepting payment in Chinese yuan. It's not legal, but it's one factor making policymakers reconsider regulations on changing money

By Joy Su  /  STAFF REPORTER

The decision to implement a pilot program that would allow for Chinese currency exchanges at local banks lies with the central bank and other financial authorities, a top cross-strait policymaker said yesterday.

"The central bank and the Financial Supervisory Board will assess the feasibility of Chinese currency exchanges, taking into consideration societal and financial need as well as the consequences it could have on cross-strait relations," Chiu Tai-san (邱太三), vice chairman of the Mainland Affairs Council (MAC), said during a press conference yesterday.

"Also, authorities could allow a pilot program to be implemented in Kinmen, Matsu and Penghu first, in accordance with Article 95 of the Act Governing Relations between Peoples of the Taiwan Area and the Mainland Area (兩岸人民關係條例)," Chiu said.

Chiu said that relevant agencies were currently looking into the matter but that a final decision had not yet been made.

Though cross-strait commercial exchanges have increased in recent years, regulations stipulate that Chinese currency exchanges cannot be offered in Taiwan unless a bilateral currency settlement agreement is signed in accordance with Article 38 of the act.

Article 38 further states that "coins and notes issued in the Mainland Area may not be brought into or taken out of the Taiwan Area except when their amounts are no more than the amount limit prescribed by the Ministry of Finance."

The ministry capped the amount of Chinese currency that could be brought into Taiwan at 6,000 yuan as of March 1.

Though currency exchanges have long been studied by cross-strait policymakers, the MAC and the central bank were most recently stirred to action by reports of restaurants that had posted signs indicating that payment would be accepted in the Chinese yuan as well as the NT dollar.

"Basically it is illegal to provide currency exchanges under the table. There are many dangers involved. For example, it could involve counterfeit money or money laundering," Chiu said.

"There is a financial risk in accepting Chinese yuan as well. You collect a large amount of Chinese yuan, but what happens if China refuses to accept it?" Chiu said.

According to the Bureau of Entry and Exit, the number of Chinese nationals visiting Taiwan increased from 28 in 1987 to 72,346 in 1997 and to 139,672 last year. In 2002, 153,923 Chinese nationals visited Taiwan. In the first three months of this year, 38,281 Chinese visitors have travelled to Taiwan.

In addition, with the increase in Taiwanese investment in China, the number of China-based Taiwanese businesspeople travelling between Taiwan and China has gone up.

The central bank said this week that according to the act, the Chinese yuan could not be offered unless a currency settlement agreement had been signed.

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