Politics

Taipei, Beijing sign financial MOUs

Financial Supervisory Commission Minister Sean Chen announced the signing of financial MOUs with mainland China Nov. 16. (CNA)

• Publication Date：11/17/2009
• Source： China Times

Taiwan has officially inked memorandums of understanding with Beijing, allowing financial industries more access to each other’s markets, Financial Supervisory Commission Minister Sean Chen announced Nov. 16.

Three documents covering the banking, insurance and securities sectors were signed, each one in both a traditional and a simplified Chinese version. No English versions were prepared.

The two sides used “Taiwan” and “mainland China” to address each other in the MOUs. The pacts were sealed via an exchange of documents and will take effect within 60 days. Categories to be granted access will be decided in compliance with the “early harvest” list identified in the proposed cross-strait economic cooperation framework agreement.

Though related laws and regulations also need to be amended in accordance with the memorandums, the MOUs provide psychological comfort to Taiwanese businessmen on the mainland, knowing that they can apply for loans from Taiwan-based financial institutions.

Signers from both sides were identified as “financial supervisory agency representatives.” According to Su Jun-pin, minister of the Government Information Office, while this might not have been the best name to use, it was acceptable in order to obtain substantial benefits under the principle of reciprocity.

According to the FSC, the documents were specially delivered to representatives on each side of the Taiwan Strait and signed respectively by Chen and Liu Mingkang, head of the China Banking Regulatory Commission. Both sides simultaneously announced the signing publicly at 6:30 p.m.

“The signing of the cross-strait MOUs is like obtaining a ticket to watch a ball game, but the seat is not too good. That’s why we have to work on sealing an ECFA, a way of securing a better seat to enjoy the match,” Chen noted.

The MOUs will help the eight Taiwanese banks which have already established liaison offices in the mainland upgrade their services to branch or subsidiary offices. Meanwhile, the Bank of China is looking to become the first Chinese bank to launch a branch office in Taiwan.

Chen pointed out the content of the MOUs includes information sharing, information confidentiality, financial supervision, constant communication and risk management, a critical issue that is the major concern of many countries after the financial tsunami.

Since the Act Governing Relations between Peoples of the Taiwan Area and the Mainland Area does not regulate financial institutions headquartered in the mainland, said Chen, the FSC will push for an amendment to the act in the next two months.

Taiwanese banks have to wait until the MOU takes force before setting up branch offices in the mainland, Chen said. “Taiwanese banks thinking of becoming a shareholder in any mainland financial institutions will have to submit a statement explaining the strategic needs for doing so,” he added.

Asked whether a mainland Chinese bank can conduct business in Taiwan based on WTO rules, Chen said the FSC will make its decision in tune with government policies. “We will not necessarily agree to full market access at this moment. The first step is merely to allow the Chinese bank to start a branch office in Taiwan.” (LC-THN)