On Developing the Onshore Foreign CurrencyBill Market in Taiwan

• Main Authors: Chung-Cheng Peng, 彭宗正
• Other Authors: Shyan-Yuan Lee
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/23548266380702099673

碩士 === 國立臺灣大學 === 財務金融學研究所 === 95 === The main purpose of this paper is to discuss on developing the onshore foreign currency bill market in Taiwan. In a globalized economic system, more corporates in our country increase the demand for capital raising and investment using U.S. dollar. Clients request the the bills finance companies to provide U.S. dollar products. At this moment, only security houses could provide foreign currency bonds issuing offshore. Owing to the existing currency exchange regulations, the competent authorities prevent bills finance companies from underwriting commercial papers in foreign currency. If corporates need to borrow U.S. dollar, they need to borrow through overseas subsidiaries or from offshore banking branches. Should the U.S. dollar money market in Taiwan been developed, the bills finance companies and corporates are able to issue U.S. dollar CP and collect U.S. dollar from the money market directly. Accordingly, it will expand the number of participators and further stimulate the money market activities in Taiwan. Facing increasing difficulties within the industry, the bills finance companies need to discover and develop novel and more lucrative business in order to gain a competitive edge. Hong Kong and Singapore have the most highly developed money market environment in Asia, rather, the market in Taiwan lags behind in this matter. However, the Taiwan money market possesses some advantages and also has ample high trading volume products. Strong 1. The implementation of TDCC system and the issuer credit rating requirements. 2. Considerable numbers of participators and high turnover rate in commercial papers and bond market; high primary/secondary trading volume to GDP ratio; corporates efforts to improve specialized finance knowledge, and financial products innovations. 3. Under existing regulations, the market environment has space for financial innovation, and allows the market makers to create a foreign currency money market. 4. It causes instability on the market if there is a dramatic financial innovation. Thus, the balance between innovation and stability always causes the authorities’ concern. In order to develop a risk control mechanism, we have to consider a safety net system to monitor the situation and, at the same time, support the innovations. It requires more considerations and efforts to do so. 5. The implementation of new information system and financial innovations are strongly related. With TDCC and liquidation system, the trading hours could be prolonged. There will be less geographic and timing constraints on CP trading, and it will also expand the demands and supplies of money market.