Renminbi clearing in Taiwan could begin this week

Central bank finalizing preparations for start of renminbi operations.

The Central Bank of the Republic of China this week could  announce clearing details with China’s intermediary, the Bank of China’s Taipei branch, while Taiwanese banks anticipate a surge in deposits. Taiwanese banks are eager to develop financial products for the wealth market.

The central bank will announce clearing operation details after signing a pact with the Bank of China (Taipei). One of the bank’s ranking executives said the chance of settling the currency clearing mechanism this week stood between 70% to 80%.

Bank of China (Taipei) is likely to imitate the Hong Kong model in which local lenders have access to the Shanghai market directly without routing through Hong Kong.

Reports said Taiwanese companies and individuals are keen to open renminbi accounts at Taiwan banking units since companies will remit their onshore renminbi to Taiwan through trade payments; moves that do not involve foreign exchange transactions. This is a convenient method to manage overall renminbi positions, especially for those who have both payables and receivables.

Renminbi deposits could reach as high as US$16.1 billion by the end of this year.