Taiwan to launch renminbi liberalization in November

Taiwan will begin its comprehensive renminbi-related businesses November 1 through authorized renminbi clearance banks.

These so-called domestic designated banking units (DBUs) will allow Taiwanese to deposit and withdraw renminbi at domestic banks and postal offices at a daily ceiling of 20,000 renminbi (around NT$96,000). Remittance to accounts with the same name in mainland China will be capped at 80,000 renminbi (NT$384,000) daily.

DBUs will engage in deposits/withdrawals, remittances, derivatives, loans and guarantees. Renminbi deposits at Taiwanese banks will be protected by the deposit insurance mechanism.

Named the Taiwan DBUs were Taishin Bank, Far Eastern Ban and Union Bank of Taiwan. These banks will be allowed to set up mainland Chinese operations via Hong Kong. Taiwan will also lift the restriction that mainland Chinese investments by domestic banks cannot exceed 15% of their book values. This should enable domestic banks such as Cathay United Bank, Hua Nan Bank, and Mega Bank to buy into mainland Chinese banks.

It also removed the condition requiring that domestic banks have business experience in member countries of the OECD (Organization for Economic Cooperation and Development) in order to invest in mainland China.

Taiwanese bankers believe the start of the renminbi business will result in business opportunities in trade financing, corporate financing, consumer financing and wealth management. They estimated that renminbi deposits will account for 5% of total banking deposits in two years and clearance for over 10% of cross-Strait trade will be carried out in renminbi.