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Central Bank of the Republic of China


Recent Developments in Central Government Securities Services

The Introduction of the DVP Mechanism

With growing recognition of the importance of sound clearing and settlement systems, the Central Bank of the Republic of China (Taiwan) launched the delivery-versus-payment (DVP) mechanism on April 14, 2008. Hereafter, interbank settlements of central government securities (CGS) are all processed on a DVP basis, except netting transactions in the over-the-counter (OTC) market.

The launch of the DVP mechanism is aimed at achieving simultaneous delivery of CGS and funds transfers by linking the Central Government Securities Settlement System(CGSS) to the CBC Interbank Funds Transfer System (CIFS). As of May 2021, interbank settlements of CGS on a DVP basis as a share of all interbank settlements reached 47.85%, substantially enhancing the safety and efficiency of transactions in the government securities market.

The Launch of the Mechanism of Bond Buybacks

The Central Bank of the Republic of China (Taiwan) launched the mechanism of central government bond buybacks on March 23, 2009. With this mechanism, the Ministry of Finance may have more flexibility in managing public debt and may reduce the government's interest payments by issuing lower yield bonds and buying back high yield bonds. In addition, the mechanism may also help increase the issues of on-the-run bonds and enhance the liquidity of the bond market.


The Launch of New Services for CGS Collaterals

In response to the needs of title transfer of collateral in derivative market practices and to the amendment to the Civil Code on pledge agreements, the Central Bank of the Republic of China (Taiwan) introduced collateral title transfer service and pledge to transfer on default service of the CGSS on September 14, 2009.

The launch of collateral title transfer service is aimed at facilitating the transactions of international swaps or derivatives and the transactions of domestic securities lending and derivatives, where the Exchange or the transferee prefers to accept CGS ownership transferred as a guaranty, or a margin deposit. Besides, in the process of collateral pledge registrations, the CGSS provides a new service that allows for the agreements between the pledge parties to transfer the ownership of pledged securities to the pledgee upon pledgors failure to pay the claim at maturity.