On September 6, the Executive Yuan approved the Financial Supervisory Commission's (FSC) plan for developing the cross-strait financial industry and the Central Bank's memorandum of understanding (MOU) on cross-strait currency clearance and settlement.
The FSC plan, which includes measures to launch across-the-board renminbi-denominated operations, a modern financial transaction platform and businesses that facilitate cash flow for e-commerce, is expected to create new opportunities for the financial services business, officials said.
Premier Sean Chen stated that these measures would be included in the upcoming economic stimulus plan. He also said cross-strait financial cooperation is accelerating, and with his backing, the cross-strait financial industry would open for business following the launch of the currency clearance and settlement mechanism approved yesterday.
The Executive Yuan said it approved the FSC's project, titled "Financial Businesses with Cross-Strait Characteristics," to assist the Taiwanese financial sector in incorporating the characteristics of cross-strait finance into its services, to integrate the financial businesses of Taiwan and mainland China more effectively and to widen the niche for the cross-strait financial market.
The FSC and the Central Bank will execute the plan in the near future and continue negotiating through the Cross-Straits Economic Cooperation Framework Agreement's trade in services agreements to attain beneficial conditions for the Taiwanese financial industry and improve the competitiveness of its financial services.
The currency clearance cooperation MOU signed by the central banks of Taiwan and mainland China August 31 was also approved by the Executive Yuan yesterday. "A New Taiwan Dollar-renminbi clearance mechanism should be established as soon as possible to offer more currency choices for cross-strait trade and to lay the foundation for Domestic Banking Units' (DBU) expansion into the renminbi business," Premier Chen commented.
In line with the growth of cross-strait regional trade and the diversification of Hong Kong's renminbi financial commodities, the Executive Yuan has incorporated the development of financial businesses tailored to cross-strait trade into the financial strategy of Taiwan's "Golden Decade, National Vision" plan, with a view to consolidating Taiwan's economic and trade position and enhancing its financial sector's competitiveness.
At a symposium on August 21, financial industry representatives engaged in a thorough discussion on issues like the development of the asset management business and the cross-strait financial business as well as the strengthening of the entire financial sector's competitiveness. Many of the suggestions they gave the premier that day have been incorporated into "Financial Businesses with Cross-strait Characteristics."
The 10 major points of this plan are as follows:
1. Launch renminbi-exchange operations at all DBUs
2. Establish a modern financial transaction mechanism
3. Kick-start businesses that facilitate cash flow for e-commerce
4. Allow credit and debit cards usable on both sides of the strait
5. Help Taiwanese financial institutions set up offices or branches on the Chinese mainland to serve Taiwanese businesses there
6. Allow sound mainland-based enterprises with Taiwanese backgrounds to be listed on the Taiwan Stock Exchange and GreTai Securities Market
7. Allow Taiwan's publicly listed companies to issue renminbi-based bonds or other tools to raise capital
8. Develop asset and wealth management businesses in the Greater China region
9. Expand insurance-related businesses and services
10. Monitor and cooperate in the removal of obstacles to gain beneficial conditions for entry to the mainland market
Cross-strait financial cooperation has grown continuously in recent years. Significant advances were made in 2009, when the Straits Exchange Foundation and the Association for Relations Across the Taiwan Straits signed a financial cooperation agreement on April 26, and the FSC signed MOUs on banking, insurance and securities with the China Banking Regulatory Commission, China Insurance Regulatory Commission and China Securities Regulatory Commission, respectively, on November 16.
To clear room for domestic financial institutions to develop further, in March of this year Premier Sean Chen invited Central Bank Governor Perng Fai-nan and FSC Minister Chen Yuh-chang to discuss plans and division of labor for the cross-strait currency clearance and settlement system as well as relevant financial operations. The ROC Central Bank and the People's Bank of China thereafter signed a currency system MOU at the end of August which completed the model shaped in the previous three financial MOUs. The government expects the latest MOU to lay a strong foundation for cross-strait financial business operations.