BOC to Offer Yuan Cash Settlement for Taiwan Banks

(Hong Kong) – China's central bank has authorized Bank of China Hong Kong Ltd. to offer yuan cash settlement services to Taiwan banks.

Zhou Xiaochuan, governor of People's Bank of China, and Xiao Gang, chairman of BOC Hong Kong, signed the authorization agreement in Hong Kong on Tuesday.

The arrangement was based on a 2009 financial cooperation agreement between the two sides of the Taiwan Straits.

Before BOC Hong Kong was authorized, only two Hong Kong commercial banks had provided yuan settlement services to Taiwan banks, which began its yuan cash settlement services in 2008. More negotiations are needed on when yuan depositing, remittance and trade settlement services can be offered in Taiwan, the PBOC said.
 
The Hong Kong unit of Beijing-based BOC has offered yuan settlement services since late 2003.

A senior official at the Hong Kong Monetary Authority said that with BOC on board, the supply of yuan notes would be reliable. He added that the exchange costs would be lowered with the increase in volume of yuan cash settlements.