BoCHK named RMB clearing bank for TW
Updated: 2010-07-14 07:21
By Oswald Chen(HK Edition)
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Taiwan's central bank Deputy Governor Chou A-ting (left) speaks to the press in Taipei Tuesday. Central News Agency |
Eligible participating banks to be exempt from 20,000 yuan limit per transaction
The People's Bank of China (PBoC), the nation's central bank, has appointed Bank of China (Hong Kong), or BoCHK, as the renminbi (RMB) clearing bank in Hong Kong to conduct Taiwan-oriented RMB cash note business, the PBoC said in an official press release Tuesday.
Under the arrangement, the RMB clearing bank in the city will provide RMB cash note exchange and related services to the Hong Kong branches of eligible Taiwan commercial banks as determined by relevant authorities in Taiwan. In turn, the Taiwan head offices of these eligible commercial banks will provide RMB cash note exchange services to other authorized financial institutions in Taiwan to serve local individual customers.
This arrangement came after the signing of the Memorandum of Cooperation between the PBoC and the Hong Kong Monetary Authority (HKMA), which is aiming to establish an RMB clearing platform in Hong Kong to conduct exchange, supply and repatriation of RMB cash notes for Taiwan.
"The agreement underscores that Hong Kong can play an important role in and contribute further to cross-Straits financial cooperation and development," Financial Secretary John Tsang said in a statement.
"As the RMB financial platform in the city is well developed, I look forward to more cross-Straits financial activities being conducted using the city's financial platform," HKMA Chief Executive Norman Chan said in a statement Tuesday.
A PBoC spokesman said in an official statement that the RMB clearing arrangement will further facilitate cross-Straits economic interactions, and will lay foundations for establishing a currency clearing mechanism and strengthening currency management between the mainland and Taiwan.
Currently, Taiwanese lenders buy RMB notes from HSBC and Bank of America (BoA) in Hong Kong to facilitate their RMB exchange, supply and repatriation businesses. The HKMA stressed that the new arrangement will not replace the existing services provided by HSBC and BoA.
There are 20 Taiwanese bank branches in Hong Kong. It is expected that the Taiwanese authority will choose the eligible banks that will conduct RMB clearing services with BOCHK as soon as possible.
Under the agreement, the current restriction placed on RMB exchanges of no more than 20,000 yuan per transaction in Taiwan will not be relaxed, but it is expected that there will be no limits placed on clearing transactions between those eligible Taiwan-based commercial banks and BoCHK, a spokesman for the HKMA said.
He said that the arrangement will stabilize the RMB cash notes supply and reduce the cost of RMB exchange operation for Taiwan banks.
He added that the arrangement can enhance the circulation of RMB, but it will not increase the pool size of the RMB capital in the city, as this is determined by the development of the RMB bond market, the yuan lending and trade settlement businesses in the city.
The arrangement was made under the Cross-Straits Financial Cooperation Agreement signed in 2009 between the mainland and Taiwan. According to the agreement, the exchange, supply and repatriation of RMB cash notes will be conducted through suitable means with commercial banks as intermediaries.
In Taipei, meanwhile, Chou A-ting, deputy governor of Taiwan's central bank, announced that it will allow authorized Taiwanese commercial banks to sign agreements with BoCHK to provide yuan cash settlement services for Taiwanese financial institutions.
After the new agreements are signed, the RMB notes will be provided by BoCHK, and New Taiwan dollar notes will be offered by the Bank of Taiwan and Mega Bank, Taiwan's top two foreign exchange banks.
"There will be three advantages - new yuan notes, lower exchange costs and a stable supply," Chou was quoted by the Central News Agency as saying at a press conference in Taipei Tuesday.
"In the future, it could lead to savings of about NT$1,000 on every procurement of 20,000 yuan," he said.
Chou also said the arrangement can reduce the number of fake yuan notes in circulation.
China Daily
(HK Edition 07/14/2010 page3)