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Chapter III Operations
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Article 12
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Unless otherwise specified by law, the Bank's operations shall be
circumscribed to business with the following organizations:
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(1) Government agencies.
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(2) Banks and other financial institutions.
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(3) International and foreign financial institutions.
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Article 13
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The currency of the Republic of China shall be issued by the Bank.
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The currency issued by the Bank shall be the national currency, and shall be
legal tender for all payments within the territory of the Republic of China.
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The Bank shall establish plants under its management to carry out the
printing and minting of the currency.
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Article 14
The Bank may, whenever necessary, delegate other government banks to
issue currency in designated regions on its behalf, to be regarded as
national currency. The assets and liabilities pertaining to the issuance of
such currency shall be for the account of the Bank.
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Article 15
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The basic monetary unit of the national currency is Yuan and the
subsidiary currencies are Chiou and Fen. Ten Fens equal to one Chiou
and ten Chious equal to one Yuan.
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The denomination, composition, form, and pattern of the notes and coins
issued by the Bank shall be proposed by the Bank, for approval by the
Executive Yuan.
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The Bank shall make public the specifications of notes and coins prior to
issuance.
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Article 16
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Against currency issued by the Bank and its delegated banks, reserves in
full equivalent value shall be maintained in gold, silver, foreign
exchange, and eligible bills and securities.
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The issuance of coins shall be exempt from reserves.
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Article 17
The amount and reserve status of currency issued by the Bank and its
delegated banks shall be made public in regular intervals.
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Article 18
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The Bank shall exchange stained or damaged notes and coins deemed to
be unfit for circulation in accordance with certain standards, and destroy
them according to law.
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The Bank may redeem currency issued. Currency redeemed shall no
longer be legal tender. However, the redemption period shall not be less
than one year, during which time holders may exchange redeemed
currency with the Bank.
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Article 18-1
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The maximum amount of national currency that may be carried or mailed
into or out of the territory of the Republic of China shall be prescribed by
the Bank.
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Currency in excess of the aforesaid maximum can not be transported
from into or out of the territory.
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Article 18-2
When financial institutions or other enterprises which are authorized to
engage in foreign exchange operations receive counterfeit or falsified
national currency or foreign currency, they shall retain, void and destroy
those currencies, save that suspicion of criminal involvement shall be
reported to the judicial authority. Regulations on handling counterfeit or
falsified currency shall be stipulated by the Bank.
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Article 18-3
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The Bank may issue gold and silver coins and commemorative notes and
coins. Regulations governing the issuance of gold and silver coins and
commemorative notes and coins shall be stipulated by the Bank.
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The sale or resale price of aforesaid notes and coins may be higher than
their denomination.
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Article 19
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The Bank may provide the following accommodations to banks:
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(1) Rediscounts of eligible bills, with maturity not exceeding 90 days
for industrial and commercial bills, and 180 days for agricultural
bills.
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(2) Temporary advances not exceeding 10 days.
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(3) Refinancing of secured loans not exceeding 360 days.
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The Bank may impose limits on rediscounts or other accommodations to
banks.
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Article 20
The Bank, in order to assist economic development, may establish
various funds, using savings deposits re-deposited by financial
institutions and other special funds to refinance medium and long-term
loans disbursed by banks.
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Article 21
The interest rates of the Bank's rediscounts and other accommodations
shall be determined by the Bank in the light of prevailing financial and
economic conditions, and made public. However, a branch of the Bank
may establish its own interest rates on rediscounts and accommodations
according to special local financial conditions, with prior approval by the
Head Office, and make them public.
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Article 22
The Bank may, at its discretion and in the light of financial and economic
conditions, prescribe an upper limit for the interest rates of bank deposits,
and approve the range of interest rates on bank loans as proposed by the
Bankers Association of the Republic of China.
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Article 23
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The Bank shall receive and keep reserves against deposits and other
liabilities of banks which are regulated by Banking Law of the Republic
of China, and may, at its discretion, adjust various deposit and other
liability reserve ratios under the following maximum limits in accordance
with the regulation governing adjustment and audit thereof, which shall
be prescribed by the Bank:
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(1) Checking deposits: 25%
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(2) Demand deposits: 25%
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(3) Savings deposits: 15%
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(4) Time deposits: 15%
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(5) Other liabilities: 25%
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The scope of aforesaid other liabilities shall be prescribed by the Bank.
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The Bank may, whenever necessary and from a specific date, impose on
the increment of the checking deposits, demand deposits and other
liabilities, a marginal reserve ratio which shall not be bound by the
maximum limits on paragraph 1 of this Article.
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The Bank may charge the banks having insufficient reserves, on the
portion of the shortfall, a penalty interest rate not higher than two times
of that prescribed in Article 21 on unsecured temporary advances as
stated in subparagraph 2, paragraph 1 of Article 19.
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Article 24
The Bank shall, in conformity with law, receive and keep reserves for
indemnity deposited by investment and trust companies.
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Article 25
The Bank, after consulting with the Ministry of Finance, may at its
discretion, prescribe for banks a minimum ratio of their liquid assets to
various liabilities.
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Article 26
The Bank may, in the light of financial conditions, purchase and sell in
the open market the bonds issued or guaranteed by the government, financial
bonds issued by banks and bills accepted or guaranteed by banks.
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Article 27
The Bank may, for the purpose of regulating monetary conditions, issue
certificates of deposits, savings bonds and short-term bonds, and may
purchase and sell them in the open market.
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Article 28
The Bank may, whenever necessary, prescribe maximum loanable ratios
selectively on the items used as collateral or mortgage of secured loans
extended by banks.
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Article 29
The Bank may, whenever necessary, prescribe and regulate the amount of
down-payment and the term of credit extended by banks for the purchase
or construction of buildings and the purchase of durable consumer goods.
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Article 30
The Bank shall prescribe and regulate the accommodations extended by
banks to securities dealers and securities finance companies.
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Article 31
The Bank may, whenever it deems that the monetary and credit
conditions so warrant, prescribe a maximum limit for the amount of
various kinds of credit extended by all, or any category of, financial
institutions.
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Article 32
The Bank shall establish a clearing house for checks and settlement of
accounts among banks at the sites of Head Office or branch offices. The
Bank may delegate a government bank to carry out this function in places
where the Bank has no branch office. Regulations governing checks
clearance and settlement of accounts among banks shall be stipulated by
the Bank.
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Article 33
The Bank shall hold international monetary reserves, and undertake the
overall management of foreign exchange.
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Article 34
The Bank may, in the light of the balance of payments situation, take
measures to adjust the demand for and supply of foreign exchange with a
view to maintaining an orderly foreign exchange market.
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Article 35
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The Bank shall undertake the following foreign exchange operations:
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(1) To draw up plans for foreign exchange management and on
anticipated receipts and payments;
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(2) To authorize and supervise banks and other enterprises engaged in
foreign exchange operations;
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(3) To settle the purchase and sale of foreign exchange;
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(4) To examine and approve private outward and inward remittances;
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(5) To supervise private enterprises' foreign borrowings guaranteed by
authorized banks, with reference to their management and their
repayment schedule;
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(6) To purchase and sell foreign currencies, bills of exchange and
securities;
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(7) To calculate, compile, analyse and report the receipts and payments
of foreign exchange;
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(8) Other operations relating to foreign exchange.
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Regulations governing requirements of application, the examination
procedure, approval of authorization, the scope of foreign operations,
withdrawal of authorization, and other matters which banks and other
enterprises applying to engage in foreign exchange operations must
comply with, shall be stipulated by the Bank.
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Article 36
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The Bank shall effect the operations of the National Treasury and manage
the National Treasury's cash accounts. It shall also manage the Central
Governmental agencies' cash accounts, bills, securities, including
receipts and payments, safekeeping and transfers, and the safekeeping of
their other asset documents.
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The Bank may delegate, whenever necessary, the operations mentioned above
to other financial institutions in places where the Bank has no branch office.
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Article 37
The Bank shall undertake the floatation and the redemption of government
bonds, issued domestically or abroad, and treasury bills. The Bank may
delegate, whenever necessary, the above to other financial institutions.
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Article 38
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In conformity with the powers and functions authorized in this Act, the
Bank shall undertake the examination of the operations of all financial
institutions in the country.
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The above examination may be performed in conjunction with the bank
examination program delegated to the Bank by the Ministry of Finance.
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The Bank may delegate a government financial institution to perform the
examination of the operations of credit cooperatives and the credit
departments of farmers' associations.
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Article 39
To coordinate the formulation of monetary policies and the execution of
financial operations, the Bank shall regularly collect economic
information, compile financial statistics and conduct monetary and
economic research.
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