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Taiwan to allow cross-strait currency exchanges in outlying islands

TAIPEI, Sept. 28 Kyodo

Taiwan is ready to lift its decades-old ban on local banks to conduct currency exchange business in Chinese yuan, the government said Wednesday.

The policy, approved at the regular Cabinet meeting, will take effect next Monday only on a trial basis in the outlying islands of Kinmen and Matsu.

It will allow the Chinese currency, with the ceiling fixed at 20,000 yuan each transaction, to be directly exchanged for the New Taiwan dollar.

''This is an expedient measure for the travelers either from Fujian Province or from Taiwan to exchange currencies,'' Premier Frank Hsieh said.

When asked about the timetable for a full-scale opening of the business, Hsieh urged central banks on both sides to negotiate as early as possible so as to establish a cross-strait liquidation mechanism.

''Both sides should open talks on this matter so as to facilitate cross-strait exchanges,'' he said.

China and Taiwan have been governed separately since the end of the 1949 civil war. Since then, direct postal, trade and shipping links across the Taiwan Strait has been prohibited on national security grounds.

Taiwan opened limited, direct transportation between its Kinmen and Matsu islands and the mainland's Xiamen and Mawei ports in January 2002 in the absence of full-scale direct links.

With both economies becoming more independent, China has allowed since early last year up to five cities in Fujian Province to provide New Taiwan dollar transaction services.

It is widely calculated that more than NT$50 billion worth of domestic currency has been carried by Taiwan businessmen to the mainland.

COPYRIGHT 2005 Kyodo News International, Inc.
COPYRIGHT 2005 Gale Group