Taiwan financial institutions may be able to offer yuan banking services beginning February 2013, ROC Central Bank Gov. Perng Fai-nan said Dec. 12.
Following implementation of the cross-strait currency settlement agreement, which took effect Oct. 5, Taiwan residents may be able to open yuan savings accounts at local institutions before the Chinese New Year holiday, Perng said. The Chinese New Year holiday begins Feb. 9, 2013.
The governor also said the central bank will negotiate with mainland Chinese authorities for higher yuan quotas than those of Hong Kong. Currently, the daily conversion quota for Hong Kong residents is capped at 20,000 yuan (US$3,197) and daily transfer quota to mainland Chinese bank accounts at 80,000 yuan.
Citing Hong Kong as an example, Perng expects yuan savings to come in at well under 8 percent of local banks’ total savings, while analysts estimate the amount to top 600 billion yuan.
In response to concerns of ROC lawmakers that yuan banking services may undermine Taiwan’s financial stability as investors rush to snap up the mainland Chinese currency, the governor said this scenario is unlikely to eventuate as he does not foresee a wide gap between the interest rates for yuan and New Taiwan dollar deposits.
The central bank will closely monitor developments and take action to maintain market order when necessary, he added.
Perng said the central bank will also discuss the possibility of establishing a currency swap mechanism with its mainland Chinese counterpart, which will allow yuan to be included in the ROC institution’s foreign reserve assets.
In addition, the central bank will soon sign a currency settlement agreement with the Taipei City Branch of Beijing’s Bank of China specifying the types of banking business it is authorized to engage in, the governor said. The BOC has been designated by mainland Chinese authorities as the yuan clearing agent in Taiwan.
Perng said he has met with the BOC head in Taipei and expressed the central bank’s intention to fast-track yuan banking business in Taiwan.