The Central Bank of China
PRESS RELEASE Release Date: September 16, 2004



Important Measures in August 2004

In line with the policy of promoting the liberalization, internationalization, and development of the foreign exchange market, the Central Bank of China (CBC) announced the following measures in August 2004:

1. On August 2, 2004, CBC instructed banks engaged in the money exchange business to purchase new machines to improve their ability to identify counterfeit U.S. currency notes. If a bank agrees to authenticate or exchange foreign currency for customers, it should proceed as soon as possible and charge reasonable fees, if necessary.

2. On August 10, 2004, CBC informed authorized banks that they may issue back-to-back L/C to third country for exporting commodities to Mainland China against master L/C from foreign banks (including banks located in Mainland China, their branches abroad and Mainland China-owned banks)

3. Approved the following Authorized Banks to operate new foreign exchange derivatives business:

(1) Bank of Taiwan: FCY Interest Rate Swaptions, 5 categories of Structured Product business composed of NTD or FCY Time Deposits linked with NTD Interest Rate Derivatives and FCY Interest Rate Derivatives.

(2) Industrial Bank of Taiwan: FCY Interest Rate Options.

(3) UBS, Taipei Branch: Structured Deposits with principal protection composed of NTD Time Deposits linked with NTD Interest Rate Derivatives and FCY Interest Rate Derivatives.

(4) Fortis Bank, Taipei Branch: FCY Interest Rate Swaptions, Structured Product composed of NTD Interest Rate Derivatives and FCY Interest Rate Derivatives, Structured Product composed of NTD or FCY Time Deposits linked with NTD Interest Rate Derivatives and FCY Interest Rate Derivatives.

4. Authorized 3 branches of 3 domestic banks to operate foreign exchange business. In addition, 8 non-authorized foreign exchange banks were approved to sell/buy foreign currency banknotes and traveler’s checks. As of the end of August 2004, there were 1,093 authorized foreign exchange banks, including 1,027 domestic banks and 66 foreign banks.