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1.These Directions are prescribed by the Central Bank of China (hereafter
referred to as "the Bank") for the purpose of implementing the provisions
of article 43 of the Banking Law and article 25 of the Central Bank of
China Act.
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2.The term "financial institutions" as used in these Directions includes banks
(domestic banks, local branches of foreign banks, medium business banks),
credit departments of farmers' associations, credit departments of
fishermen's associations and credit cooperative associations.
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3.The New Taiwan dollar-denominated liabilities against which financial
institutions are required to put up liquid reserves shall be listed as
follows:
(1)Checking deposits (including checking accounts deposits, certified checks
and traveler's checks)
(2)Demand deposits
(3)Savings deposits (including passbook savings deposits, lumpdeposit/
lump-payment savings deposits, installment-deposit/lumppayment savings
deposits, lump-deposit/installment-payment savings deposits,
interest-bearing savings deposits, and bank employees' savings accounts,
provided those portions already pledged are deducted)
(4)Time deposits (including time savings deposits and negotiable certificates
of deposit, provided those portions already pledged are deducted)
(5)Government Treasury deposits (the net balance after deducting the
re-deposits at the Bank's Treasury Department)
(6)Net dues to banks in call loan market
(7)Net trading balance of repurchase agreements in bonds/bills markets
(8)Other liabilities as designated by the Bank.
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4.All types of New Taiwan dollar-denominated liabilities of financial
institutions shall be subject to a minimum liquid reserve requirement (
hereafter referred to as "liquidity ratio"), which shall be set by the Bank
in consultation with the Financial Supervisory Commission, Executive Yuan (
hereafter referred to as "the FSC").
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5.Qualified liquid reserve assets for various financial institutions shall be
limited to the followings :
(1)Excess reserves
(2)Net dues from banks in call loan market
(3)Treasury bills
(4)Certificates of deposits issued by the Bank
(5)Negotiable certificates of deposit (net balance of each bank's holdings
after deducting negotiable certificates of deposit it has issued)
(6)Banker's acceptances (net balance of each bank's holdings after deducting
drafts it has honored)
(7)Trade acceptances
(8)Commercial papers (net balance of each bank's holdings after deducting
face value of commercial papers it has guaranteed)
(9)Government bonds
(10)Corporate bonds (net balance of each bank's holdings after deducting
face value of corporate bonds it has guaranteed)
(11)Bank debentures (including subordinate bank debentures,the available
amount of which being limited to the net-debit position of its bank
debentures issued by other banks after subtracting those issued by
itself)
(12)Re-deposits at designated banks with due terms no more than one year
(either banks' re-deposits with the Bank or grassroot financial
institutions' re-deposits with banks mandated by the Bank)
(13)The New Taiwan dollar-denominated bonds issued in Taiwan by international
financial organizations approved both by the Bank and the FSC; and
corporate bonds issued in Taiwan by foreign issuers in accordance with
the "Regulations Governing the Offering and Issuance of Securities by
Foreign Securities Issuers".
(14)Other liquid assets as approved by the Bank
The holding positions of bonds and bills referred in the preceding paragraph
shall include reverse repurchase agreements but exclude repurchase agreements.
Bills as listed in subparagraphs 6 through 8 under paragraph 1 are limited to
those issued in accordance with the provision of paragraph 1, article 4 of "
The Law Governing Bills Finance Business" and purchased from the money market.
Established pledge rights and portions provided as guarantees shall be deducted
from the assets mentioned in subparagraph 3 through 14 of the paragraph 1
except those pledged to the Bank as collaterals for intra-day overdrafts. The
unpaid amount shall be deducted from the liquid assets on a daily basis when
the intraday overdraft fails to be repaid.
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6.With respect to the "net dues to banks in call loan market " as indicated in
subparagraph 6, paragraph 1, Direction 3 and the "net dues from banks in call
loan market" as indicated in subparagraph 2, paragraph 1, Direction 4, the
total of net dues to and from inter-bank call loans for the entire month shall
be calculated first. If the total is net due to banks, a daily average shall be
filled in on a daily basis and the liquid reserves shall be calculated and put
up. If the total is net due from banks, a daily average shall be filled in on a
daily basis and serve as the liquid reserve.
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7.Required liquid reserves of a financial institution shall be calculated on a
monthly basis and conducted by its headoffice.
Daily average liquid reserve requirement for a given month shall be average
daily balance of all types of New Taiwan dollar-denominated liabilities referred
to in Direction 3 multiplied by the liquidity ratio.
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8.Financial institutions shall self-adjust their daily average balances of actual
daily liquid reserves for a given month to ensure they do not fall below the
Bank's minimum liquidity ratio, and shall compile a monthly liquid reserve
requirement report （as the attached format）to be submitted together with a
table of relevant details before the 15th of the following month to the
Department of Banking of the Bank （hereafter referred to as " the Department
of Banking "） (for banks) or to the banks mandated by the Bank for scrutiny (
for farmers' and fishermen's association credit departments, credit cooperatives)
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9.The Bank shall audit the monthly liquid reserve requirement report submitted by
each financial institution with its daily financial statements and relevant
information and compile a consolidated monthly liquid reserve requirement report
for all the financial institutions and refer such report to the FSC .
The mandated banks shall compile the monthly liquid reserve requirement reports
and relevant statements of the farmers' and fishermen's association credit
departments and credit cooperatives that they supervise. The full report covering
all relevant institutions shall be submitted to the Department of Banking prior
to the end of the following month for examination and recordation.
The format of the full report of monthly liquid reserve requirement in preceding
paragraph shall be set by the Department of Banking.
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10.The Bank and the mandated banks audit the monthly liquid reserve requirement
reports filed by banks and farmers' and fishermen's association credit
departments and credit cooperatives. Where there are violations of the
minimum liquid reserve requirement as defined in Direction 4, the Bank shall
ask the FSC to notify the financial institution in question to adjust its
reserves within a specified period of time. Where there are serious instances
of falsification or fabrication, the Bank may conduct an on-site examination.
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