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1.These Directions are prescribed by the Central Bank of the Republic of China
(Taiwan)(hereafter referred to as "the Bank") for the purpose of implementing the
provisions of Article 25 of the Central Bank of the Republic of China Act and
Article 43 of the Banking Act of the Republic of China.
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2.The term "financial institutions" as used in these Directions includes banks
(domestic banks, local branches of foreign banks), agricultural financial
institutions (credit departments of farmers' associations, credit departments of
fishermen's associations, Agricultural Bank of Taiwan), and credit cooperatives.
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3.The items of New Taiwan Dollar-denominated liabilities against which financial
institutions are required to put up liquid reserves are as follows:
(1) Checking deposits (including checking deposits and certified checks).
(2) Demand deposits
(3) Savings deposits (including passbook savings deposits, lump–deposit/
lump-payment savings deposits, installment-deposit/lump– payment savings
deposits, lump-deposit/installment-payment savings deposits,
interest-withdrawal 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) Bills/bonds sold under repurchase agreements.
(8) Other liabilities as designated by the Bank.
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4. All items of New Taiwan Dollar-denominated liabilities of financial institutions
shall be subject to a minimum liquid reserve ratio 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 financial institutions shall be limited to
the followings New Taiwan Dollar-denominated assets:
(1) Excess reserves;
(2) Net dues from banks in call loan market;
(3) Re-deposits at designated banks with term to maturity of no more than one year
(either bank re-deposits with the Bank or Grassroots financial institution
re-deposits with banks mandated by the Bank);
(4) Certificates of deposit issued by the Bank;
(5) Government bonds;
(6) Treasury bills;
(7) New Taiwan dollar-denominated bonds issued in Taiwan by international financial
organizations approved both by the Bank and the FSC; and New Taiwan
Dollar-denominated corporate bonds issued in Taiwan by foreign issuers in
accordance with the "Regulations Governing the Offering and Issuance of
Securities by Foreign Securities Issuers";
(8) Negotiable certificates of deposit (net balance of each bank's holdings after
deducting negotiable certificates of deposit it has issued);
(9) Bank debentures (including subordinate bank debentures, the amount of which
being limited to the net-debit position of its bank debentures issued by other
banks after subtracting those issued by itself);
(10) Banker's acceptances (net balance of each bank's holdings after deducting drafts
it has accepted);
(11) Trade acceptances;
(12) Commercial papers (net balance of each bank's holdings after deducting face value
of commercial papers it has guaranteed);
(13) Corporate bonds (net balance of each bank's holdings after deducting face value
of corporate bonds it has guaranteed); and
(14) Other liquid assets as approved by the Bank.
The holding positions on bonds and bills referred to in the preceding paragraph shall
include reverse repurchase agreements (RS) but exclude repurchase agreements (RP).
Bills as listed in subparagraphs 10 through 12 of paragraph 1 hereof are limited to
those in compliance with the provision of subparagraph 1, Article 4 of "The Act
Governing Bills Finance Business" and purchased from the money market.
The amounts of qualified liquid reserve assets listed in subparagraphs 4 through 14
of paragraph 1 hereof shall be calculated according to the following rules, provided
the financial institution has recorded them according to the Statement of Financial
Accounting Standards No. 34; the preceding provision does not apply to assets recorded
not according to the above Statement:
(1) For assets classified as "financial assets held for trading" and
"financial assets designated as at fair value through profit or loss"
recorded under "financial assets at fair value through profit or loss",
the amount shall be that after adding/deducting valuation adjustment.
(2) For assets classified as "available-for-sale financial assets", the amount shall
be that after deducting accumulated impairment loss and adding/deducting valuation
adjustment.
(3) For assets classified as "held-to-maturity financial assets" or "non-active market
debt instruments", the following rules shall be undertaken:
i. For assets listed in subparagraphs 4 through 6 of paragraph 1 hereof, the amount
is that after deducting accumulated impairment loss.
ii. For assets listed in subparagraphs 7 through 14 of paragraph 1 hereof shall not
serve as liquid reserve assets.
For assets mentioned in subparagraph 1 of paragraph 1 hereof, the amount of pledged "
reserves account B" with the Bank shall be deducted. For assets mentioned in
subparagraphs 3 through 14 of paragraph 1 hereof, the portions pledged or provided as
guarantee shall be deducted. The portion of assets pledged to the Bank as collateral
for intraday overdrafts, rediscount, short-term accommodations or accommodations with
collateral that remains outstanding at the close of business shall be deducted from
the liquid assets on a daily basis.
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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 5, the net
total for the entire month shall be calculated first. If the net total is due to
banks, a daily average shall be filled in on a daily basis and serve as basis for
putting up liquid reserve liabilities. If the net total is due from banks, a
daily average shall be filled in on a daily basis and serve as the liquid reserve
assets.
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7. Financial institutions shall put up liquid reserves on a monthly basis.
The daily average of liquid reserve requirement for a given month shall be the
sum of average daily balance of all items of New Taiwan Dollar-denominated
liabilities specified in Direction 3 multiplied by the liquidity ratio specified
in Direction 4 for the whole month divided by the number of days in the month.
The daily average of actual liquid reserves for a given month shall be the sum
of New Taiwan Dollar-denominated liquid reserve assets as provided in Direction
5 for the whole divided by the number of days in the month; financial
institutions shall make their own adjustments to ensure their actual daily
averages does not fall below their daily averages of liquid reserve requirement.
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8.Financial institutions shall compile the “Liquid Reserves Adjustment Report”
(Attachment 1) on a monthly basis and submit it together with related detailed
schedules before the 15th of the following month to the Bank’s Department of
Banking（hereafter referred to as " the Department of Banking "） (for banks and
Agricultural Bank of Taiwan) or to the banks mandated by the Bank (for credit
departments of farmers' associations, credit departments of fishermen's
associations, and credit cooperatives) for examination.
The Liquid Reserves Adjustment Report mentioned in the preceding paragraph shall
be compiled by the head office of the financial institution. In the event of
merger of financial institutions, the report shall be compiled by the surviving
or newly established financial institution.
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9.The mandated banks shall collect the liquid reserves adjustment reports and
relevant schedules prepared by credit departments of the farmers' associations
and credit departments of fishermen's associations and credit cooperatives which
are examined by branches of mandated banks, and compile accordingly the "Examined
Liquid Reserves Summary Report" (Attachment 2) and submit the same to the
Department of Banking prior to the end of the following month for examination and
recordation.
The Bank will produce the “Agricultural Finance Institutions Liquid Reserves
Status Report “ based on the information that the credit departments of farmers'
associations and credit departments of fishermen's associations submit according
to the preceding paragraph, and information submitted by the Agricultural Bank of
Taiwan.
The Bank will produce a “Financial Institutions Liquid Reserves Status Report”
based on the Liquid Reserves Adjustment Reports submitted by banks and the
summary reports mentioned in the preceding two paragraphs.
The Bank will forward a copy of the Financial Institutions Liquid Reserves Status
Report to the FSC and a copy of the Agricultural Finance Institutions Liquid
Reserves Status Report to the Council of Agriculture, Executive Yuan（hereafter
referred to as " the COA "）
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10. The Bank and the mandated banks will audit the monthly liquid reserve reports
filed by financial institutions. Where there are serious instances of
falsification or fabrication, the Bank may conduct an on-site examination.
When financial institutions fail to meet the minimum liquid reserve ratio
requirement, the Bank shall ask the FSC or the COA to notify the financial
institutions in question to make necessary adjustment within a specified period
of time.
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11.Banks and the Agricultural Bank of Taiwan shall upload on a monthly basis the
"Term to Maturity Analysis of NTD Assets/Liabilities" (Attachment 3) to the
“Banks and Bills Finance Companies Supervisory Information Filing Window”
according to the instructions of the Bank's Department of Financial Inspection,
and control the capital gap for the flow of funds in the next one to thirty days.
Banks and the Agricultural Bank of Taiwan shall also report to the Bank's
Department of Financial Inspection the historical experience and other parameters
used in preparing the "Term to Maturity Analysis of NTD Assets/Liabilities" in
the preceding paragraph, and subsequent changes thereto, if any.
Where the negative funding gap from the flow-of-funds in the next one to thirty
days exceeds the reference value set by the Bank, the bank shall immediately
report to the Bank's Department of Banking for providing explanations and
proposing measures of improvement. The Bank will forward the report to the FSC or
the COA.
The Bank may demand banks and the Agricultural Bank of Taiwan to explain the gap
according to their "Term to Maturity Analysis of NTD Assets/Liabilities" listed
in paragraph 1; the Bank may conduct an on-site examination when needed.
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