Taiwan unveiled regulations concerning financial activities across the Taiwan Straits on Tuesday, starting to entertain applications from local banks for establishing mainland representative offices that are confined to information gathering, consulting and market analysis.

Mainland experts welcomed the move as a positive step towards free financial exchanges across the Straits.

"(The regulations) show a policy loosening in Taiwan, which is a good sign,'' said Wang Guogang, deputy director of the Finance Research Centre of the Chinese Academy of Social Sciences. ``But it's a very small step.''

While disapproving the future mainland offices of banking businesses like taking deposits and lending, the regulations also included an easing of constraints on international banking outlets of Taiwanese banks.

Establishments of mainland representative bodies by Taiwan-based banks are still up to the People's Bank of China for final approval, a central bank official said.

Declining to comment on the news, the official said the mainland policies for Taiwan-based financial institutions are the same as those for financial institutions from foreign countries.

Taiwan's financial authorities said they would exercise caution in setting up the non-operational representative offices on the mainland, in fear that the new policy would encourage capital outflow and increase bank lending.

Mainland investment by Taiwanese investors are still limited by the Taiwanese authorities.

Banks in Taiwan are relatively smaller than their mainland counterparts but enjoy higher expertise and provide better services.

(China Daily 06/29/2001)