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2 Taiwan Banks to Open Offices on Mainland

The head of China's central bank says two financial institutions from Taiwan will be allowed to set up offices on the mainland for the first time. It is a small step toward greater economic integration between China and Taipei.

Dai Xianglong, governor of the People's Bank of China, says he has given a "green light" for two banks from Taiwan to set up offices on the mainland, in Shanghai and Kunshan. The two banks will be able to open representative offices the offices are the first step toward obtaining a full banking license in China.

Mr. Dai says it is very good news, signaling new progress in financial cooperation between the two sides of the Taiwan Straits.

The central bank chief says he expects Taiwan in turn to allow mainland banks to set up shop on the island.

Taiwan broke away from China half a century ago during a civil war, and has been governed separately ever since. China regards Taiwan as a rebellious province that should be returned to central government control. Despite the political standoff, Taiwan businesses have poured $60 billion worth of investment into China in recent years.

Taiwan for decades discouraged many kinds of commercial links with the mainland. During the 1990s, Taipei eased the restrictions, and its recent economic downturn has prompted more easing of the rules.

In Monday's press conference, Governor Dai also said conditions are not yet right for China's national currency to become fully convertible with other currencies.

Mr. Dai says China will keep the currency exchange rate stable, something that is "beneficial for China and Asia."

The central bank governor says Beijing will allow rapid growth in the money supply to keep the economy moving, and help China reach its target of seven percent economic growth this year.