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Taiwan eyes cross-strait currency exchanges

TAIPEI, Nov. 25 Kyodo

Taiwan is ready to lift its decades-old ban on local banks conducting currency exchange business in China's yuan, a newspaper reported Thursday.

The government considered the time ripe for pursuing the policy given wide expectation in the market for the yuan's appreciation, the Chinese-language China Times said.

To fulfill the plan, it also urged central banks on both sides to negotiate as early as possible so as to establish a cross-strait liquidation mechanism before the business is in full operation.

Although no timetable has been set as to when the policy will be formally carried out, the Mainland Affairs Council noted that it has planned to allow the yuan to be directly exchanged for the New Taiwan dollar in such outlying islands as Kinmen and Matsu on a trial base.

''This is an expedient measure to cope with mainlanders coming from Fujian Province and carrying the yuan only to visit Kinmen and Matsu,'' the council's deputy chairman Chiu Tai-san was quoted as saying.

China and Taiwan have been governed separately since the 1949 civil war.

Taiwan opened limited, direct postal, trade and shipping links between its Kinmen and Matsu and the mainland's Xiamen and Mawei ports in January 2002 in the absence of full-scale direct links across the Taiwan Strait.

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

It is widely calculated that more than NT$50 billion (about $1.5 billion) worth of domestic currency has been carried by Taiwan businessmen to the mainland.

COPYRIGHT 2004 Kyodo News International, Inc.
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