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October 21, 2016

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39 more institutions allowed to issue CDs

CHINA yesterday allowed 39 financial institutions, including three foreign banks, to issue large-denomination certificates of deposit (CDs) to individuals and companies.

This brings the total number of institutions allowed to issue the CDs to 353, according to a statement from the China Foreign Exchange Trade System.

CDs are tradable deposit agreements that allow the market to play a central role in deciding the interest rates of financial products.

China started to allow banks to issue large-scale CDs in June 2015, in a step toward interest rate liberalization, which was basically completed in October 2015 with the removal of the deposit rate upper limit.

The new move aims to grow the CD market and allow more financial bodies to price their products based on the market, CFETS said.

The three foreign-funded banks approved to issue CDs are OCBC Wing Hang Bank (China) Ltd, Bank of Tokyo-Mitsubishi UFJ (China) Ltd and Standard Chartered Bank (China) Ltd.

The threshold for buying a CD is 300,000 yuan (US$44,500) for individuals and 10 million yuan for institutions.


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