Currency Convertibility Means Cross-Strait Win/Win

Currency Convertibility Means Cross-Strait Win/Win
China Times editorial (Taipei, Taiwan, ROC)
A Translation
April 5, 2012

Summary: In the wake of the financial tsunami, the Euro fell victim to the European debt crisis. The US dollar was also debased. The RMB remains bullish because Mainland China is the world's second largest economy. Singapore and London are actively seeking to become offshore RMB centers. These are tremendous business opportunities. Taiwan enjoys many advantages. It must not be left behind. Enormous cross-Strait goodwill has been exchanged at the highest levels. We look forward to the swift signing of a currency clearing agreement, and the implementation of cross-Strait currency interchangeability. The establishment of a cross-Strait currency clearing system will be a major milestone, following the signing of the cross-Strait financial MOU.

Full Text below:

The Boao Forum has adjourned. The Wu/Li Meeting attracted a great deal of attention. Mainland Vice Premier Li Keqiang said that greater economic cooperation equals greater cross-Strait prosperity. He said that following ECFA, Beijing would accelerate follow-up consultations and cross-Strait currency clearing system agreements. Beijing would approve cross-Strait agreements signed in the first half of the year. Vice President-elect Wu Den-yih revealed that a Mainland-based bank would set up a branch bank on Taiwan, and conduct business in NT dollars. Banking and Finance Academy Chairman Shea Jia-dong called on the two sides to establish a currency clearing system, as soon as possible. A currency clearing system would increase cross-Strait currency convertibility, accelerate the internationalization of the RMB, and create a win/win situation for both Beijing and Taipei.

Economic and trade exchanges have intensified since the two sides signed ECFA. More and more members of the public are calling for the establishment of a cross-Strait currency clearing system. Central Bank President Perng Huai-nan told the Legislative Yuan that "Consultations over the cross-Strait currency clearing system are proceeding smoothly. The atmosphere is positive. We hope to reach an agreement before the summer recess."  Perng said "The Central Bank is very anxious to complete this task." Premier Sean Chen pointed out that "If we can reach an agreement with the Mainland, we will have a basis for a RMB offshore trading center." In fact, the ROC Central Bank has already conducted exercises simulating the cross-Strait currency clearing and settlement systems. Everything is ready. We are merely waiting for Beijing to give the plan the nod.

Consultations over cross-Strait currency clearing and settlement systems have been long delayed. But recently events took a turn for the better. In mid-March, during the 11th National People's Congress, PRC Premier Wen Jiabao said he would promote a cross-Strait banking settlement system within his term. He said he would encourage cross-Strait banking industry stock offerings. Li Keqiang mentioned the cross-Strait currency settlement agreement at the Boao Forum. Wen Jiabao and Li Keqiang's statements show that Beijing's attitude regarding the establishment of cross-Strait currency clearing system has run hot and cold.

According to reports, the Bank of China Taipei Branch has been successfully upgraded. It will become the RMB clearing bank on Taiwan. The Bank of Taiwan and the Mainland Branch of the Mega International Commercial Bank will also undergo liquidation. At the end of March, Bank of China President Li Lihui, told reporters in Beijing that "The Bank of China enjoyed a unique advantage during liquidation. It was fully prepared." He said that good clearing and settlement systems would be extremely beneficial to the cross-Strait financial sector, as well as to business growth on both sides. Such statements show that the Bank of China is ready.

What are the benefits of a cross-Strait currency clearing system? One. Cross-Strait trade will benefit from another instrument for making payments. A currency clearing system will enable businesses to reduce foreign exchange costs and risks. Two. Taiwan has a substantial surplus on the Mainland. The RMB is not an international currency. The ROC Central Bank has accumulated large quantities of RMB. These must constantly be converted into U.S. dollars. For Beijing, this will accelerate the internationalization of the RMB. As Shea Jia-dong said, "The two sides must still clear their currency through Hong Kong. This is reminiscent of the old system of no direct flights. A direct currency clearing system will benefit both sides. "

Over the long term, the two sides must first create a currency clearing system, Only then can Taiwan take the next step towards becoming an offshore RMB center. National banks and designated foreign exchange banks (DBU) must be permitted to conduct business in RMB. Once that happens, savings accounts, bonds, and other wealth management instruments and financial derivatives, will bring in ten times as many opportunities. They will open the way to a "Blue Ocean." Cross-Strait trade totals 150 billion USD annually. Taiwan businessmen on Mainland China have unofficially invested over 200 billion USD. Last year, 1.7 million Mainland tourists visited Taiwan. Over 28 million Mainland tourists visited Hong Kong. There is still much room for growth. Once the two sides establish a currency clearing system, Taiwan will enjoy advantages over Singapore and London as an offshore RMB center.

The key to the establishment of a cross-Strait currency clearing system lies with Beijing. The ROC Central Bank has been consulting with the Peoples Bank since 2010. But it has made no progress over the past year. Financial analysts consider currency a symbol of national sovereignty. Cross-Strait currency clearing agreements involve political sensitivities. Beijing wanted Hong Kong to remain its number one offshore RMB center. That is why it shelved the cross-Strait currency clearing system. But as long as both sides are willing, technical problems can be overcome.

In the wake of the financial tsunami, the Euro fell victim to the European debt crisis. The US dollar was also debased. The RMB remains bullish because Mainland China is the world's second largest economy. Singapore and London are actively seeking to become offshore RMB centers. These are tremendous business opportunities. Taiwan enjoys many advantages. It must not be left behind. Enormous cross-Strait goodwill has been exchanged at the highest levels. We look forward to the swift signing of a currency clearing agreement, and the implementation of cross-Strait currency interchangeability. The establishment of a cross-Strait currency clearing system will be a major milestone, following the signing of the cross-Strait financial MOU.

中時電子報 新聞
中國時報 　2012.04.09
社論－兩岸「貨幣直航」 互利雙贏
本報訊

    　博鰲論壇剛落幕，備受矚目的「吳李會」中，大陸副總理李克強表示，兩岸進一步深化經濟合作，有利促進兩岸共同發展，將加快ＥＣＦＡ後續協商及兩岸貨幣清算協定，爭取上半年簽訂兩岸投保協定；副總統當選人吳敦義透露將開放一家陸資銀行在台承作新台幣業務。金融研訓院董事長許嘉棟則呼籲兩岸盡快建立貨幣清算機制，讓兩岸「貨幣直航」，此舉有助人民幣國際化，共創互利雙贏。

    　兩岸簽訂ＥＣＦＡ之後，經貿往來更加密切，民間要求建立兩岸貨幣清算機制的聲浪日益高漲。央行總裁彭淮南日前在立法院答詢時指出，「目前兩岸貨幣清算機制協商進行非常順利，氣氛也相當好，希望在暑假前能完成簽署。」「央行非常急，希望能把這個任務完成。」行政院長陳?亦指出，「未來若與大陸方面達成協議，人民幣離岸交易中心就有基礎。」事實上，針對兩岸貨幣清算機制，央行早已完成沙盤推演，萬事俱備，只等對岸點頭。

    　延宕已久的兩岸貨幣清算機制協商，近來似乎有了轉機。三月中旬，大陸國務院總理溫家寶在第十一屆全國人大總理記者會上表示，任內將推進兩岸銀行結算體系合作、鼓勵雙邊銀行相互參股；接著，李克強在博鰲論壇提及兩岸貨幣清算協定。從溫家寶到李克強的談話，顯示大陸對建立兩岸貨幣清算機制的態度似乎由冷轉熱。

    　據報載，未來中國銀行台北分行順利升格，可望成為在台的人民幣清算行，屆時將與台灣銀行、兆豐銀行大陸分行直接進行清算。三月底，中國銀行行長李禮輝在北京的記者會中明白指出，「中行在清算方面具獨特優勢，也做了很多準備。」他表示，兩岸若能建立良好的清算機制，不但對兩岸金融業的發展極為有利，也對兩岸企業發展相當有好處。這段談話顯示，中行已準備好了。

    　兩岸建立貨幣清算機制，究竟有何好處？首先，兩岸貿易可以多一種支付工具的選擇，有助企業降低匯兌成本與風險；其次，台灣對大陸有大幅出超，由於人民幣還不是國際貨幣，國銀累積大量人民幣必須隨時可以兌換成美元。對大陸言，則加快人民幣國際化腳步。誠如許嘉棟所言，「目前兩岸仍要透過香港做貨幣清算，感覺就像以往無法直航時一樣，建立直接貨幣清算機制，對兩岸都有好處。」

    　長遠來看，兩岸必須先建立貨幣清算機制，台灣才可能進一步爭取成為人民幣離岸中心。對本國銀行而言，一旦外匯指定銀行（ＤＢＵ）可以承做人民幣業務，從存放款、債券到各種財富管理的金融衍生商品，將帶來至少十倍的商機，有如開啟了新藍海。由於兩岸每年貿易額達一千五百億美元，台商赴大陸投資非正式統計累計逾二千億美元；觀光方面，去年陸客來台約一百七十多萬人次，而陸客赴港已逾二千八百萬人次，台灣仍有很大成長空間。兩岸建立貨幣清算機制之後，台灣比新加坡、倫敦更具優勢發展為第二個人民幣離岸中心。

    　然而，不可諱言，兩岸貨幣清算機制的建立，關鍵在大陸方面。我國央行雖然早在二○一○年就與人民銀行進行協商，但一年多來遲遲沒有進展。金融界人士分析，貨幣是一個國家主權的象徵，兩岸簽署貨幣清算協議涉及敏感政治層面，而且當時大陸全力發展香港為第一個人民幣離岸中心，兩岸貨幣清算機制問題於是被擱置一旁。不過，只要雙方有意願，相關技術問題都是可以克服的。

    　金融海嘯之後，歐元陷入歐債危機，美元地位亦大不如前，人民幣則因中國躍居全球第二大經濟體而行情看漲，包括新加坡、倫敦都積極爭取成為人民幣離岸中心，面對此一龐大商機，具備諸多優勢的台灣當然不能落於人後。我們期待在兩岸高層陸續釋出極大善意下，雙方加速完成貨幣清算協定的簽署，以落實兩岸貨幣直航；兩岸貨幣清算機制一旦建立，將是繼兩岸金融ＭＯＵ之後，另一個重大的里程碑。