Sun, Jul 18, 2004 - Page 3 News List

Be careful about changing currency rules, analysts say

CHINESE MONEY A MAC official had said rules on exchanges involving the Chinese yuan might be relaxed, but some say lots of problems could arise


A day after an official announced that the government is weighing the option of allowing exchanges of Chinese currency in Taiwan, experts warned yesterday against possible complications from the move and called for complementary measures.

Experts urged the government to prepare for the planned exchanges, taking into account the delicate relations between Taiwan and China.

Because currency exchanges between two countries are closely linked to their political ties, the experts pointed out that the government must pay extraordinary heed to allowing Chinese currency to be exchanged in Taiwan.

Chiu Tai-san (邱太三), vice chairman of the Mainland Affairs Council (MAC) , said Friday that the government is considering allowing the free trade and exchange of Chinese currency in Taiwan.

But he also said that direct currency exchange services would be permitted only in certain fixed spots such as international airports in the initial stages.

According to Chiu, the MAC, the Central Bank of China and the Finance Supervision Commission are to iron out systematic regulations and mechanisms to serve this end amid increased contacts across the Taiwan Strait.

Last year, Taiwanese people paid more than 2.73 million visits to China, while about 150,000 Chinese people apply to travel to Taiwan per year, MAC statistics show.

It is an open secret that Chinese currency is widely accepted in many local restaurants and popular tourist destinations, such as Sun Moon Lake and Alishan, and Chinese currency has become very common in Taiwan after the government in April began allowing inbound Taiwanese to bring in a maximum of 6,000 Chinese yuan.

The Chinese yuan now is the currency most held by Taiwanese people after the US dollar.

In the face of frequent currency-exchange needs and growing demand for Chinese currency at home, many local businesses have begun to offer clandestine currency-swap services, at great risk to themselves, analysts said.

But they pointed out that the problem of counterfeit currency has been rampant in recent years on both sides of the Taiwan Strait and that a lack of official mechanisms to deal with illegal currency exchanges has created many disputes.

Saying that free exchanges of Chinese currency will be unavoidable as Taiwan attempts to build itself into a business operations center for the Asia-Pacific region, analysts called on the government to start talks on a currency-settlement pact with China to provide a feasible means of ensuring sound two-way economic activities across the Taiwan Strait.

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