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

Chapter I.　　General Provisions

Article 1
　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.

Article 2

　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.

Article 3
　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.

Article 4
　The capital of the Bank shall be appropriated from the National Treasury.
　It shall be fully owned by the Central Government and nontransferable.

Chapter II.　　Organization

Article 5

　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.

Article 6

　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.

Article 7

　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.

Article 8

　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.

Article 9
　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.

Article 10

　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.

Article 11

　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.

Chapter III　　Operations

Article 12

　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.

Article 13

　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.

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.

Article 15
 

　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.

Article 16

　 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.

Article 17
　The amount and reserve status of currency issued by the Bank and its
delegated banks shall be made public in regular intervals.

Article 18
 

　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.

Article 18-1

　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.

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.

Article 18-3

　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.

Article 19

　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.

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.

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.

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.

Article 23

　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.

Article 24
　The Bank shall, in conformity with law, receive and keep reserves for
indemnity deposited by investment and trust companies.

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.

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.

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.

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.

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.

Article 30
　The Bank shall prescribe and regulate the accommodations extended by
banks to securities dealers and securities finance companies.

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.

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.

Article 33
　The Bank shall hold international monetary reserves, and undertake the
overall management of foreign exchange.

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.

Article 35

　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.

Article 36

　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.

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.

Article 38

　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.

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.

Chapter IV.　　Budgets and Fiscal Reports

Article 40
　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.

Article 41
　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.

Article 42
　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.

Article 43
 

　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.

Chapter V.　　 Appendix

Article 44

　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.