Laws and Regulations Database of the Central Bank of the Republic of China(Taiwan)

The Central Bank of the Republic of China (Taiwan)(hereafter called the Bank) shall be a government bank and an agency under the Executive Yuan.

The primary objectives of the Bank's operations shall be:

(1) To promote financial stability;

(2) To guide sound banking operations;

(3) To maintain the stability of the internal and external value of the currency;

(4) To foster economic development within the scope of the above objectives.

The Bank shall have its Head Office at the site of the Central Government and may establish branch offices in all regions of the country. The establishment and abolition of its branch offices shall be authorized by the resolution of the Board of Directors and reported to the Executive Yuan for approval.

The capital of the Bank shall be appropriated from the National Treasury. It shall be fully owned by the Central Government and nontransferable.

The Bank shall have a Board of Directors consisting of eleven to fifteen directors to be nominated by the Executive Yuan and appointed by the President of the Republic. An Executive Board of Directors composed of five to seven executive directors shall be designated among the directors.

The Governor of the Bank, the Minister of Finance and the Minister of Economic Affairs shall be ex officio directors and executive directors. Among the directors, there shall be at least one each from the agricultural, the industrial and commercial, and the banking sectors.

Except for the ex officio directors, the directors shall be appointed for a term of five years, and may be reappointed upon the expiration of such term.

The powers and functions of the Board of Directors shall be as follows:

(1) To examine policies concerning money, credit and foreign exchange;

(2) To examine the adjustment of the Bank's capital;

(3) To approve the operation plans of the Bank;

(4) To examine the budget and fiscal reports of the Bank;

(5) To examine and approve major by-laws and regulations of the Bank;

(6) To examine the establishment and abolition of the Bank's branch offices;

(7) To approve the appointment and the removal of the Bank's department heads and their deputies, and branch managers;

(8) To examine matters proposed by the Governor.

The Board of Directors may delegate all or part of the above powers and functions to the Board of Executive Directors. The resolution of the Board of Executive Directors shall be reported to the Board of Directors for record and approval.

The Board of Directors shall establish rules and regulations of board meetings. Such rules and regulations shall be reported to the Executive Yuan for record.

The Bank shall have a Board of Supervisors, composed of five to seven supervisors to be nominated by the Executive Yuan and appointed by the President of the Republic. The Director-General of Budget, Accounting and Statistics of the Executive Yuan shall be an ex officio supervisor.

Except for the ex officio supervisor, the supervisors shall be appointed for a term of three years andmay be re-appointed upon the expirations of such term.

The Board of Supervisors shall have a chairman to be elected from among the supervisors.

The powers and functions of the Board of Supervisors shall be as follows:

(1) To examine the Bank's assets and liabilities;

(3) To examine the reserves for the issuance of currency by the Bank;

(4) To examine the amount of currency issued by the Bank;

(5) To examine and approve the Bank's fiscal reports;

(6) To investigate any case involving violation of this Act and the bylaws and regulations of the Bank. The result of such investigation shall be referred to the Board of Directors for corrective action.

The Bank shall have a Governor with the rank of special appointment and two Deputy Governors with the rank of selective appointment, all of whom shall be appointed for a term of five years and may be reappointed upon the expiration of such term.

The Governor shall be the chief executive in directing and supervising the operations of the Bank, shall carry out resolutions of the Board of Directors, and shall represent the Bank on all occasions. The Deputy Governors shall assist the Governor in the execution of the above duties.

The Governor shall be the chairman of the Board of Directors and the Board of Executive Directors.Whenever the Governor is unable to attend in person, the Deputy Governor designated to act for the Governor shall be the chairman.

Upon the resolution of the Board of Directors and approval by the Executive Yuan, the Head Office of the Bank may establish the following departments to effect its operations:

(1) Department of Banking.

(2) Department of Issuing.

(3) Department of Foreign Exchange.

(4) Department of the Treasury .

(5) Department of Financial Inspection .

(6) Department of Economic Research.

(7) Secretariat.

(8) Department of Accounting.

The Head Office of the Bank may establish committees to handle special matters.

Unless otherwise specified by law, the Bank's operations shall be circumscribed to business with the following organizations:

(1) Government agencies.

(2) Banks and other financial institutions.

(3) International and foreign financial institutions.

The currency of the Republic of China shall be issued by the Bank.

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.

The Bank shall establish plants under its management to carry out the printing and minting of the currency.

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.

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.

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.

The Bank shall make public the specifications of notes and coins prior to issuance.

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.

The issuance of coins shall be exempt from reserves.

The amount and reserve status of currency issued by the Bank and its delegated banks shall be made public in regular intervals.

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.

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.

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.

Currency in excess of the aforesaid maximum can not be transported from into or out of the territory.

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.

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.

The sale or resale price of aforesaid notes and coins may be higher than their denomination.

The Bank may provide the following accommodations to banks:

(1) Rediscounts of eligible bills, with maturity not exceeding 90 days for industrial and commercial bills, and 180 days for agricultural bills.

(2) Temporary advances not exceeding 10 days.

(3) Refinancing of secured loans not exceeding 360 days.

The Bank may impose limits on rediscounts or other accommodations to banks.

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.

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.

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.

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:

(1) Checking deposits: 25%

(2) Demand deposits: 25%

(3) Savings deposits: 15%

(4) Time deposits: 15%

(5) Other liabilities: 25%

The scope of aforesaid other liabilities shall be prescribed by the Bank.

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.

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.

The Bank shall, in conformity with law, receive and keep reserves for indemnity deposited by investment and trust companies.

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.

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.

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.

The Bank may, whenever necessary, prescribe maximum loanable ratios selectively on the items used as collateral or mortgage of secured loans extended by banks.

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.

The Bank shall prescribe and regulate the accommodations extended by banks to securities dealers and securities finance companies.

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.

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.

The Bank shall hold international monetary reserves, and undertake the overall management of foreign exchange.

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.

The Bank shall undertake the following foreign exchange operations:

(1) To draw up plans for foreign exchange management and on anticipated receipts and payments;

(2) To authorize and supervise banks and other enterprises engaged in foreign exchange operations;

(3) To settle the purchase and sale of foreign exchange;

(4) To examine and approve private outward and inward remittances;

(5) To supervise private enterprises' foreign borrowings guaranteed by authorized banks, with reference to their management and their repayment schedule;

(6) To purchase and sell foreign currencies, bills of exchange and securities;

(7) To calculate, compile, analyse and report the receipts and payments of foreign exchange;

(8) Other operations relating to foreign exchange.

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.

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.

The Bank may delegate, whenever necessary, the operations mentioned above to other financial institutions in places where the Bank has no branch office.

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.

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.

The above examination may be performed in conjunction with the bank examination program delegated to the Bank by the Ministry of Finance.

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.

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.

Before the beginning of each fiscal year, the Bank shall prepare a draft budget for examination and adoption by the Board of Directors, the adopted budget shall be processed in accordance with the Budgeting Law.

After the close of each fiscal year, the Bank shall prepare fiscal reports for examination and adoption by the Board of Directors. The adopted reports shall be examined and approved by the Board of Supervisors, and processed in accordance with the Fiscal Reporting Law.

At the close of each fiscal year, the Bank shall set aside fifty per cent of its net profit as legal reserve. In case the amount of the accumulated legal reserve equal or exceed of the Bank's current capital, the percentage herein prescribed may, subject to the resolution of the Board of Directors and the concurrence of the Board of Supervisors, be reduced to a level no lower than twenty per cent.

The gain or loss from the Bank's assets or liabilities denominated in gold, silver, foreign currencies and other forms of international reserve, resulted from changes in parity of the national currency, or changes in the value, parity or exchange rate of these assets and liabilities relative to the national currency, shall not be listed in the Bank's annual income stateatement.

Any gain from the above changes shall be posted in the Exchange Reserve Account, and any loss shall be offset in the balance of that Account.

This Act shall become effective on the date of promulgation.

The effective date of the Article 23 amendment shall be prescribed by the Executive Yuan.