Forex services liberalized in FTZ
Print Edition
BANKS are now allowed to offer foreign currency services with special accounts operating in the Shanghai free trade zone as China continues to liberalize financial measures in the FTZ, the Shanghai headquarters of the People’s Bank of China said yesterday.
Companies with the accounts will now be able to manage their yuan and foreign currencies under a unified system, which could facilitate foreign and local exchange conversion, lower the conversion costs, and better manage foreign exchange rate risks, the central bank said in a statement.
Financial institutions can now offer foreign currency services for trade and foreign direct investment for offshore companies and companies in the free trade zone, the statement said.
Sun Lijian, a Fudan University professor, said the new move could help companies use funds more efficiently — low-cost borrowings for their domestic businesses or foreign exchange to expand their footprint offshore.
Experts also saw the move as a step toward the opening-up of more cross-border investment options, including trading of stocks and properties, as the financial infrastructure becomes more mature.
The move enhances functions of the free trade account, which was introduced in June last year to allow a freer cash flow between the free trade zone and offshore.
The account was allowed to handle offshore fundraising in foreign currencies in February this year.
The latest move comes as policy-makers attempt to bolster the economy by lowering operational costs for companies, and is a step toward capital account convertibility.
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