Taiwan must ease rules to become offshore yuan hub: SinoPac Financial
Taiwan should remove restrictions on mainland companies and its currency so the island can become an offshore hub for the yuan, SinoPac Financial Holdings said.
The island should allow the free entry and exit of yuan and lift a ban on mainland companies selling bonds denominated in the currency in Taiwan, said Stan Siao, president of SinoPac, the first Taiwan lender to draw a mainland investor.
"We aren't a financial centre yet," Siao, whose company is selling a 20 per cent stake in Bank SinoPac to Industrial and Commercial Bank of China, said on Wednesday. "For us to become one, a certain mindset has to be changed."
Taiwan is competing with Singapore and London to become a hub for the yuan as the mainland seeks to internationalise its currency.
The island's banks began taking yuan deposits domestically in February, and Taiwan's first yuan debt sale followed the same month. Foreign-currency bond transactions are subject to a yield tax of as much as 15 per cent in Taiwan, and mainland issuers, which accounted for more than 60 per cent of dim sum debt sales in Hong Kong last year, are barred from the market.
"In the past, the two sides were enemies so of course they made a lot of rules and protections," SinoPac Financial chief financial officer Michael Chang said. "Now that they want to develop relations, they are removing them. We hope they can remove them faster."
The People's Bank of China in May appointed ICBC as the yuan-clearing bank for Singapore. Like the mainland, Taiwan maintains capital controls.