Historical Review of the Banking System

The banking system can be traced back to the period in China itself, when four major government banks — Central Bank of China, Bank of China, Bank of Communication, and Farmers’ Bank of China — were predominant in the banking system. This framework still has a strong influence on the banking system of Taiwan today. All four big banks have moved their head offices to Taiwan (see Table 2.1). The Bank of China in the Taiwan district and jurisdiction was reorganised, and converted from government ownership into private ownership; and the name was changed to International Commercial Bank of China, immediately after Taiwan had withdrawn from the United Nations in 1971. 1 The Central Bank of China was rehabilitated in Taiwan in 1961. The Farmers’ Bank of China was founded in 1933. Its head office was moved to Taipei in 1949, and resumed full operation in 1967. An important aspect is that its staff managed the Land Bank of Taiwan in order to carry out the land reform of China,2 which success contributed significantly to the industrialisation of Taiwan. The Bank of Communication was established in Peking in 1907. Its head office was moved to Taipei in 1949 and resumed full operations in 1960.3 It was then transformed into a development bank, a ‘special purpose’ bank.