By Chris Wang / Staff reporter
Increasing yuan deposits in Taiwan without sufficient regulation could exacerbate the nation’s economic dependence on China in the future and leave the banking industry open to Chinese manipulation, a Taiwan Solidarity Union (TSU) lawmaker said yesterday.
Citing central bank statistics, TSU Legislator Lai Cheng-chang (賴振昌) told a press conference that the total amount of yuan in Taiwan as of May this year was more than NT$290 billion (US$9.63 billion), of which more than 60 percent was deposited at the Bank of China’s Taipei branch.
“As yuan deposits increase, so does Taiwan’s economic dependence on China. With yuan increasingly used on the market, it would be easier for China to manipulate Taiwan’s banking sector and economy,” Lai said.
The yuan has been used at various tourist spots across the country, despite it not having been made a fiat currency in Taiwan, and bonds issued in yuan, which have become popular on the market, could be a risk for domestic investors in the case of a debt crisis, the lawmaker said.
The central bank has signed a Memorandum on Cross-strait Currency Clearing Cooperation with the People’s Bank of China without first establishing an inflow mechanism and has allowed domestic banking units to provide yuan services with a daily maximum of 20,000 yuan (US$3,225) in trades and a daily remittance cap of 80,000 yuan, Lai said.
The lawmaker called on the central bank to look at the potential crisis seriously as domestic banks encourage clients to increase their yuan deposits to take advantage of higher interest rates — about 3 percent to 4 percent at present.
The government should address the rapid growth of yuan deposits before it becomes a national security issue and before it is too late to “turn back the tide,” Lai said.