1 June 2013


Paola Subacchi

Dr Paola Subacchi

Senior Research Fellow, Global Economy and Finance

Helena Huang


  • As the world's second largest economy, China is promoting wider use of its currency, the renminbi (RMB), across the world. International financial centres, notably Hong Kong, are developing the RMB offshore market.
  • The cross-border RMB trade settlement scheme has noticeably expanded the use of the RMB in trade since 2010. The scheme provides the main source of liquidity to the RMB offshore market.
  • The RMB offshore market is expanding and offers more investment opportunities. But the limited supply of liquidity remains a constraint on its size and scope.
  • Taipei is the new player in the RMB offshore market and has strong growth potential, the main drivers being close cross-Strait cooperation in trade and foreign direct investment. The recently opened currency clearing system should ensure liquidity to the market.
  • As a regional financial centre, Taipei is unlikely to rival Hong Kong, at least in the short term. Non-Taiwanese investors are deterred by regulatory restrictions, higher taxation and lack of financial openness.
  • Proactive policies are necessary to support the development of the RMB market in Taipei. To become a key regional financial centre, it needs a clear strategy to maximize the advantages derived from the dynamic domestic economy.