The Taiwan Central Bank announced Sept. 17 that Bank of Taiwan’s Shanghai branch has been selected as the nation’s cross-strait currency clearing agent.
The central bank’s announcement came following the inking of a cross-strait memorandum of understanding on currency settlement Aug. 31. The pact is set to take effect 60 days after each side completes administrative procedures.
Bank of Taiwan stood out from seven other applicants in its financial statement and experience with foreign exchange, the central bank said. In the early stages it will provide New Taiwan dollar clearing services in mainland China.
The other seven banks were Cathay United Bank, Chang Hwa Bank, First Commercial Bank, Hua Nan Bank, the Land Bank of Taiwan Co. Ltd., Mega International Commercial Bank and Taiwan Cooperative Bank.
Bank of Taiwan will need to submit an operating plan for approval by the central bank and the People’s Bank of China, which is yet to name its clearing agent.
“As the largest bank in Taiwan, we have always hoped for the chance to become a cross-strait currency clearing agent,” Bank of Taiwan said in a statement. The bank noted that it has been the NT dollar correspondent bank for years, and has abundant experience in currency identification and other exchange operations such as collection and payment, transit, supply and demand adjustments, and the return of currency.
“We are confident we can handle the job well.”
Set to take effect in October, the memorandum is perceived as an important first step for local institutions in offering yuan-denominated settlement services.