Cross-Strait currency clearing speeds up

As early as Wednesday, certain banks in Taiwan will start their yuan-denominated businesses. This comes after Bank of China's Taipei branch got the go-ahead to clear yuan-denominated transactions on the island. In the meantime, Bank of Taiwan's Shanghai operation is expected to kick-start its New Taiwan Dollar clearing service soon as well.

Bullish on the prospects of the yuan, lenders in Taiwan are poised to attract clients by cutting commissions, higher interest rates on fixed term deposits, and an ultra low threshold for opening a yuan account. Analysts say the yuan is attractive to local investors due to the currency's low fluctuation risks and higher returns.

Some expect the new business will allow the yuan to account for 3-5 percent of Taiwan's total deposits in one year's time.

On the other side of the Strait, Bank of Taiwan's Shanghai unit received around 20 million New Taiwan Dollars from its headquarters, and is expected to start the currency's clearing services after receiving official approval.

In the meantime, Taiwan investors are hoping for the introduction of more yuan denominated bonds on the island.

A Taiwan resident said, "Some yuan bonds issued overseas have rather high yields. It's good that the yuan bonds can be issued in Taiwan."

The Chinese mainland's securities regulator has also announced higher quota for Taiwanese seeking to invest in the mainland's financial markets under the RQFII scheme.