The Central Bank of China

PRESS RELEASE Release Date: December 8, 2001




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Important Measures in November, 2001

In line with our policy of liberalization and internationalization, and for further development of foreign exchange business, the Central Bank of China (CBC) took the following measures in November:

1.To implement the consensus reached in the Economic Development Advisory Conference regarding "the flow-back system of outbound capital -the revolving use of capital inflows from domestic companies' overseas subsidiaries," the Central Bank of China announced that domestic companies' borrowing from their overseas subsidiaries, and the relevant foreign exchange settlements for the borrowing and the repayment of principal and interest are completely unrestricted.

The above-mentioned domestic companies are required to obtain approval for their overseas investments from the Foreign Investment Commission of the Ministry of Economic Affairs. The above measures took effect from November 8, 2001.

2. On November 6, 2001, the CBC endorsed the following measures proposed by the Securities and Futures Commission of the Ministry of Finance (SFC):

(1) Effective from November 13, 2001, the quota for each qualified foreign institutional investor (QFII) to invest in domestic securities was raised from US$2 billion to US$3 billion.

(2) On November 13, 2001, the SFC announced that QFIIs were no longer required to submit a Chinese version of the application documents for their investments in domestic securities.

3. Approved Hua Nan Commercial Bank and BNP PARIBAS Taipei Branch to commence the business of Foreign Currency Trust Funds Earmarked for Investment in Foreign Securities.

4. Approved the following Authorized Banks to operate derivatives business:

(1)Ta Chong Bank Ltd. operates NT Dollar Structured Deposits business, which is composed of NT Dollar Time Deposits and Foreign Currency Options.

(2)UBS AG Taipei Branch operates NT Dollar or Foreign Currency Structured Deposits business, which is composed of NT Dollar or Foreign Currency Time Deposits and Foreign Currency Interest Rate Options.

5. Authorized 6 branches of 3 domestic banks to operate foreign exchange business. In addition, 25 non-authorized foreign exchange banks were approved to sell/buy foreign currency banknotes and traveler's checks. As of the end of November, there were 981 authorized foreign exchange banks, including 912 domestic banks and 69 foreign banks.