Central bank OKs Bank of China branch to clear RMB
The China Post news staffTAIPEI, Taiwan -- Taiwan's central bank yesterday approved an application by the Taipei branch of the Bank of China to be the renminbi clearing bank on the island.
January 29, 2013, 11:59 am TWN
The application was processed in a speedy manner to enable regular banks to offer renminbi products prior to the Lunar New Year break, which begins on Feb. 9.
Yesterday, right after the Central Bank of Republic of China (Taiwan) opened for business, Bank of China's Taipei branch sent the application, which was approved by 11:30 a.m.
Tsai Chun-jung, head of the branch, went to the central bank himself to get the authorization letter.
The application was sent yesterday after Bank of China's Taipei branch last Friday received approval from the People's Bank of China to clear renminbi in Taiwan.
Tomorrow, the central bank and Bank of China's Taipei branch will jointly hold a briefing inviting representatives from major banks in Taiwan, who will be briefed on how renminbi clearing will be conducted.
Renminbi clearing sets the stage for Taiwan banks to offer products and services denominated in the currency, also known as the yuan.
Details regarding the offering of renminbi products have yet to be determined, for example at what level should interest rates be set and whether processing fees for renminbi buybacks will be required.
Local banks are eagerly awaiting the opening of renminbi-related businesses. Many of them have already announced the minimum thresholds for making renminbi deposits. For example, Bank of Taiwan has set the minimum for renminbi savings at 600 yuan, and renminbi time deposits at 6,000 yuan.
Meanwhile, to avoid systematic risk in Taiwan's financial industry, the central bank may set a maximum for total renminbi deposits in Taiwan, the local Financial Times said yesterday.
According to the report, the cap may be one-tenth of Taiwan's total foreign exchange reserves, which stood at US$403.1 billion last year. A tenth of that would be equivalent to 250 billion yuan.