China keen on establishing currency settlement scheme with Taiwan

The move aimed to further boost business of China in Taiwan as economic exchanges across the Taiwan Strait are increasing daily.

China is actively looking at setting up a cross-Strait currency settlement scheme with Taiwan, a Chinese official said on Wednesday, as the two long-time political rivals take another step towards closer economic ties.

"Economic exchanges across the Taiwan Strait are increasing daily, and there is an objective need to set up a cross-Strait currency settlement scheme as soon as possible," said Fan Liqing, a spokeswoman for China's Taiwan Affairs Office.

"At present, we are actively researching an appropriate way to push for the establishment of this, and we hope that there will be progress soon," she told a regular news briefing in Beijing, without giving further details.

The two sides have been discussing a settlement system for some time as trade ties deepen following a landmark free-trade style agreement signed last June, and as China seeks to step up the internationalisation of the yuan.

Last July, China authorised the Hong Kong arm of Bank of China to provide yuan cash settlement services for Taiwan banks operating in the territory.

Under that deal, two Taiwanese banks, state-run Mega Bank and Bank of Taiwan, can clear Chinese yuan, but only in cash via Bank of China's Hong Kong branch. Taiwanese in Taiwan can buy up to 20,000 yuan ($3,048) in cash per day.

View the full story in Reuters.