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| Perng Fai-nan takes questions at the legislature. (Photo/Wang Yuan-mao) |
Perng
Fai-nan, the head of Taiwan's central bank, said Wednesday he hopes to add the
renminbi to Taiwan's foreign reserves in a year's time under a landmark currency
clearing agreement signed by Taipei and Beijing.
Perng said
there is still a lot of work to do following the signing of the memorandum of
understanding on currency clearance, including holding negotiations on
establishing a cross-strait currency swap mechanism.
He made the
comment in response to lawmakers' questions on the progress of the clearing
mechanism at a hearing of the Legislative Yuan's Finance Committee Wednesday.
Enabling
central banks to swap Taiwan dollars and Chinese yuan will enable Taiwan to
diversify its foreign exchange reserves by adding the yuan into its portfolio,
which is currently heavily weighted toward US dollars.
The central
bank signed the deal on yuan clearing with the People's Bank of China on Aug.
31.
Under the
pact, both sides need to designate a clearing bank to activate the mechanism.
Taiwan has chosen the state-run Bank of Taiwan's branch in Shanghai as the
Taiwan dollar settlement bank in China.
China has
yet to announce its clearing bank for the renminbi in Taiwan.
The
clearing mechanism will allow Taiwan to become the second offshore yuan trading
center after Hong Kong.
Meanwhile,
Perng's future was also a hot topic at the committee meeting. His current term
is scheduled to end in February 2013, and several lawmakers asked him if he
would agree to stay on as head of the central bank.
Perng was
non-committal, replying only that serving as central bank governor would be his
last job in public service.
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