Cross-Strait cash-currency clearance mechanism to be set up soon.

Taipei, Sept. 9, 2009 (CENS)--Taiwan and China are going to establish a semi-official cash-currency clearance system, which will cut the cost for local people in conducting conversion between NT dollar and renminbi.

Su Ning, deputy governor of People's Bank of China (PBC), pointed out in Taipei yesterday (Sept. 8) that PBC and Taiwan's Central Bank of China (CBC) are now in talk for the setup of such mechanism, which is expected to be finalized soon. Su is attending a cross-Strait seminar on bills finance business.

Insiders noted that the cash-currency clearance mechanism will be conducted by one or two designated clearance banks on both sides of the Strait, which will supply NT dollar or renmimbi mutually. In Taiwan, two candidates for the mechanism are Bank of Taiwan and Mega Bank.

Presently, due to the absence of cross-Strait currency clearance agreement, domestic banks obtain the supply of renminbi mostly via Bank of America or HSBC in Hong Kong, for which they have to bear extra fees. The additional cost is passed to local customers.

The arrangement can be made before the signing of the memorandum of understanding (MOU) for cross-Strait cooperation in financial supervision and a currency clearance agreement between PBC and CBC, which may involve some sensitive political issues. The latter agreement is indispensable for cross-Strait bulk currency transactions, such as those connected with remittance or trade settlement.