Taiwan - Money

The financial industry in Taiwan operates within 3 important legal frameworks: the Banking Law, the Securities and Exchange Law, and the Insurance Law. Three government agencies oversee financial operations: the Ministry of Finance (MOF), the Central Bank of China

Exchange rates: Taiwan
New Taiwan dollars per US$1
2001	N/A
2000	33.082
1999	31.395
1998	32.216
1997	32.052
1996	27.5
SOURCE: CIA World Factbook 2001 [ONLINE].

(CBC), and the Departments of Finance of each municipal or provincial government.

The MOF is in charge of supervising the financial markets and allied financial institutions in Taiwan through its subordinate agencies: the Bureau of Monetary Affairs, the Securities and Exchange Commission, and the Department of Insurance. In addition, it formulates policies that contribute to the development and efficiency of Taiwan's financial service sector. The CBC controls the strict implementation of the monetary policies of Taiwan as outlined in the provisions of the Banking Law and the Law Governing the CBC.

Each of the provincial or municipal governments has its own Department of Finance. Collectively, these departments direct and control community financial institutions such as credit cooperatives and the credit of farming and fishing associations.

The several agencies and institutions that comprise the structure of Taiwan's financial sector offer a wide variety of financial services, designed to cater to clients from big business to individual account holders.

Banks fall into several categories such as commercial banks, specialized banks, local branches of foreign banks, and others, established under Taiwan's banking laws, which undertake savings and trust business and deal in securities. In the past, the sector was dominated by government-owned banks, but, as a result of increasing competition and government privatization policies, 15 new private commercial banks were established in 1991. These new arrivals now dominate the market.

Credit cooperatives provide banking services in regional communities where the customer base is small and it is not economically viable to establish commercial banks. Grassroots organizations such as farming and fishing associations usually have credit departments to take charge of promoting economic development in their particular areas. Investment and trust companies act as fund managers of trust funds and trust properties.

The Postal Savings System of Taiwan has more than 1,600 post offices throughout the island where people can remit or deposit money. Money may be withdrawn and re-deposited into banks, or reinvested in different financial instruments.

The insurance industry offers life and other insurance. Life insurance includes simple life insurance, health insurance, and accident insurance. Other policies offer fire insurance, marine insurance, land and air transportation insurance, liability insurance, and other non-life insurance.

In 1960 the Securities and Exchange Commission was founded in Taiwan, based on American and Japanese models. In 1961, the Taiwan Stock Exchange (TSE) was established and began operating in 1967, and the Securities and Exchange Law was passed in 1968.

The first securities traded in Taiwan were issued by the Taiwanese government in 1949, and were called "Patriot bonds." Trading in stocks began on an informal basis in 1953 when the government launched its "Land to the Tillers" program. The objective of the program was for government to buy land from large landowners and distribute it equitably among farmers with no land of their own. Rather than money, landlords were issued government shares in previously nationalized enterprises. Since the landowners were not interested in holding these stocks, an informal market developed to trade these shares.