TAIPEI, Sept 17 (Reuters) - Taiwan’s central bank said on Monday it has picked the Shanghai branch of state-owned Bank of Taiwan to be the clearing bank for Taiwan dollar transactions in China, under a landmark currency clearing system agreement signed earlier this month.
Bank of China is expected to be chosen by the China’s central bank, People’s Bank of China, to be the yuan clearing bank in Taiwan.
China and Taiwan signed an agreement on a clearing system for each other’s currency earlier this month, marking the start of the final stage of an economic integration that has drawn Taiwan closer to its one-time political foe and lifted trade to over $160 billion annually.
Under the agreement, there will no longer be a need to convert each other’s currency into U.S. dollars first in trade transactions, while Taiwan’s banks will be allowed to offer loans in yuan to entities outside Taiwan. (Reporting by Jeanny Kao; Writing by Clare Jim; Editing by Jonathan Standing)