TAIPEI -- Taiwan's monetary authorities announced Monday the Bank of Taiwan's Shanghai branch has been designated as the clearing bank to carry out new transactions of Taiwan dollars on the Chinese mainland.

Eight of the ten qualified Taiwan-based banks filed applications to be the clearing bank within the specified time, and the Bank of Taiwan's Shanghai branch won because of its overall condition, according to the island's monetary authorities.

The mainland and Taiwan signed a currency clearing memorandum on Aug. 31, paving the way for a cross-Strait currency clearing mechanism.

Under the memorandum, the two sides will each designate a clearing bank to carry out currency settlements and liquidations for the other side. The clearing banks will be able to carry out cash exchanges of currencies from the two sides.

The mainland-based People's Bank of China has not yet announced the mainland's clearing bank in Taiwan but said it will choose from the Bank of China or the Bank of Communications, which have already set up their Taipei branches on the island.

The memorandum was welcomed by people from both sides of the Taiwan Strait. Yang Yi, spokesman with the State Council Taiwan Affairs Office, described it as "another important step for cross-Strait financial cooperation."