NT$-YUAN PACT SOON

Hu Xiaolian, a vice governor of the People's Bank of China from Beijing, said an agreement on the currency clearance and settlement system can be concluded before the proposed Economic Cooperation Framework Agreement (ECFA) between the two side is formally signed.

Hu, who arrived in Taipei Monday for the 15th cross-strait financial cooperation seminar, told reporters that preparations for the direct currency trading mechanism between Taiwan currency and China's have been in progress for quite some time.

She said the preparatory work is actually “80 to 90 percent” complete.

Noting that currency clearance services would be provided by commercial banks on both sides of the Taiwan Strait, Hu said the technical matters to be worked out include the transport and delivery of the currencies, the opening of accounts in the participating banks, and the compilation of statistics.

The system would allow the direct conversion of the New Taiwan dollar and China currency — yuan or renminbi — by banks on both sides. This will lower the cost of currency conversion and reduce the circulation of counterfeit banknotes, Hu said.

The more convenient currency transactions will encourage the increasing number of Chinese tourists to spend more in Taiwan during their trips here, she said.

When addressing the seminar, Vice Chairwoman Lee Jih-chu of Taiwan's Financial Supervisory Commission (FSC) said many ideas and proposals for closer cross-strait cooperation now have the best opportunities to be put into practice. Lee has attended the seminar every year since its inception 15 years go.

Bank of China Ltd. is likely to be the first bank in mainland China to be allowed to conduct the currency trade, Hu said.

Chairwoman Susan Chang of the state-run Bank of Taiwan told reporters that she expects her bank to be the first financial institution in Taiwan to handle cross-strait currency settlements.

“The signing of the memorandum of understanding on financial cooperation is an entry ticket to China's financial markets,” she said.

Chang and Hu are scheduled to discuss details on the currency exchange services at a separate meeting on Thursday.

Executives at Mega Commercial Bank here said their bank is ready to provide the new financial service.

Financial supervisory agencies on both Taipei and Beijing sides signed three memorandums of understanding on Nov. 16 to widen access to each other's banks, insurance firms and securities brokerages.

The accords will enable Taiwan banks to accelerate expansion in the world's fastest-growing major economy as the authorities in Taipei and Beijing are pushing ahead deeper cross-strait economic cooperation and interchanges.

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