Taiwan to further economic integration with China through new currency clearing system
Taiwan’s Rmb clearing system agreement with China is a major step towards it becoming an offshore Rmb hub. But fiscally, it lags far behind Hong Kong. September 03, 2012 | Baron LaudermilkTaiwan recently signed a long-expected pact on a renminbi clearing system with China that will include interbank renminbi trading. The agreement, which will come into effect next week, represents a significant move that will help Taiwan become an international offshore renminbi hub. People’s Bank of China and Central Bank of the Republic of the China (Taiwan) are also in the process of negotiating a currency swap deal that will allow Taiwan to hold renminbi assets in its foreign-exchange reserves and, possibly, buy Chinese bonds. This is certainly good news for Taiwanese businesses, with many having demonstrated a keen appetite for Chinese dim-sum bonds. With the renminbi gaining traction as a currency, and China having become one of Taiwan’s main trading partners, banks on the island are eager to enter the renminbi business, with many already looking to acquire renminbi deposits. Taiwan’s offshore bank branches and offshore banking units (OBU) have acquired more than $2.6 billion in renminbi deposits, with Mega International Commercial Bank’s OBU in the lead, possessing renminbi deposits worth $627 million, accounting for 31% of the total market share. In a similar vein, Chinatrust Commercial Bank saw a major year-on-year growth of 316% in renminbi deposits, from June 2011 to June 2012. The recent deal between both East Asian countries also allows settlement of trade directly in each other’s currency, which will help aid companies in both nations avoid having to first convert their currency into US dollars. Similarly, European companies too, prefer use of the renminbi to bypass the dollar conversion fee. According to a recent Deutsche Bank survey, 80% of smaller companies are considering use of the renminbi to settle trade with their respective Chinese partners, while the remaining 20% are already doing so. Firms utilising the renminbi to conduct their businesses also stand to save on costs in the long run, with a recent Please login to read the complete article. If you already have an account, you can login now or subscribe/register. Categories: China, Government Finance, Rmb, Taiwan, Trade Finance, Transaction BankingChina,Government Finance,Rmb,Taiwan,Trade Finance,Transaction Banking, China,Government Finance,Rmb,Taiwan,Trade Finance,Transaction Banking, , Capital Marketscapital, Capital Markets, Keywords:PBoC, Central Bank Of The Republic Of The China (Taiwan), Mega International Commercial Bank, Chinatrust Commercial Bank, Dariusz Kowalcyk, Credit Agricole, Perng Fai-nan, HKMA PBoC, Central Bank of the Republic of the China (Taiwan), Mega International Commercial Bank, Chinatrust Commercial Bank, Dariusz Kowalcyk, Credit Agricole, Perng Fai-nan, HKMA
|