A Research On The Perfection Of Currency Liquidation Mechanism Of Accelerating The Development Of Cross-Strait Economy And Trade

In 2010, the Economic Cooperation Framework Agreement (ECFA) had been implemented, and a profound impact on cross-strait investment, economic and trade, social development and communication is generated. While the cross-strait cooperation relationship becomes closer, lots of cross-strait financial cooperation achievements are achieved. After years of efforts, cross-strait currency liquidation mechanism finally entered substantive operational stage in February 6,2013, and’direct navigation of currency’ between Taiwan and main China came true.There are many advantages after the establishment of cross-strait currency liquidation mechanism. It realizes using local currency liquidation during cross-strait trade and investment. This greatly reduces cross-strait people and businesses’cost of remittance, trade, investment and other deals and settling. And it also reduces the exchange rate risk and provides the convenience for the further development of cross-strait economy and trade exchanges. However, since the time of the establishment of cross-strait currency liquidation mechanism is still short, there are still some problems in the process of its substantive operation which need to be further improved to ensure the stable operation of cross-strait currency liquidation mechanism, and to better serve the development of cross-strait economy and trade relations.In view of this, this article chooses improving cross-strait currency liquidation mechanism as a purpose to make a systematic research. Firstly, the paper combs some theory which settle theoretical basis for the research and policy recommendations of this article, involving currency liquidation, currency clearing mechanism, exchange rate risk, transaction costs, regional economic integration, free trade zone, sovereign monetary and financial development so on. Second, this paper analyzes the development process of cross-strait economic and trade from three aspects of the cross-strait trade, investment and personnel flows between the two sides. Thirdly, the paper describes the establishment of cross-strait currency liquidation mechanism and its impact on cross-strait economy and trade, the paper elaborates the relevant content about the establishment of cross-strait currency liquidation mechanism from the establishment background, the subscribing process of cross-strait currency liquidation agreement and the status quo of currency liquidation, also analyzes the impact of cross-strait currency liquidation mechanism on cross-strait trade from both theoretical and empirical aspects, come to a conclusion that strait currency liquidation mechanism can accelerate the development of cross-strait economy and trade. Fourthly, the paper indicates problems which cross-strait currency liquidation mechanism faced. Fifthly, this paper chooses the experience of Hong Kong RMB clearing and Singapore RMB business as a reference, and link those problems above analysis that the current cross-strait currency liquidation mechanism exists to put forward some policy recommendations, consisting the establishment of cross-strait exchange rate formation mechanism, the establishment of cross-strait RMB back mechanism, the openness of related financial services, strengthen and improve the regulation mechanism of cross-strait currency liquidation.