Recently, the Development and Reform Commission, Ministry of Commerce, the People’s Bank of eight ministries jointly issued “Notice on accelerating the development of international cooperation and guidance of new competitive advantages (hereinafter referred to as” Notice “) pointed out that to promote financial reform and innovation steady progress in financial globalization and opening up.
including the proposed “actively and steadily push forward the pilot of the foreign institutional investment in the inter-bank bond market to expand RMB back channels, including the” Capital Account Liberalization and actively and steadily push forward “and” timely guide insurance, securities and other financial institutions to the outside to carry out international business “such as” going out “views.
promote the RMB back
“notice” that China’s development of the external environment facing more complex, and an urgent need for accelerating the development of international cooperation and new competitive advantages. To this end, eight ministries the task of 16 goals, including to promote financial reform and innovation, deepen financial opening-up, improving the regional pattern of opening, and steadily promote financial internationalization, and accelerate the implementation of “going out” strategy.
which is proposed to study allows eligible international financial organizations, foreign monetary authorities and financial institutions will hold the yuan investment in China’s financial markets.
At present, foreign institutional investment in domestic financial markets has been more limited. Foreign institutions through the QFII can invest in the special account subject to strict supervision and management inside the domestic stock market.
, the central bank has issued a document in August 2010 that allow foreign central banks or monetary authorities, the clearing bank of RMB business in Hong Kong, Macao and cross-border Renminbi trade settlement outside the participating banks three types of institutions to use the yuan investment in China’s inter-bank bond market .
But the “Daily Economic News” reporter learned from the firm’s financial transactions in a city center stakeholders at foreign institutions only through managed funds in the account of the People’s Bank of China, on behalf of the central bank to do the participating banks The bond market is not able to direct investment.
these people said that this year the industry had hot direct investment in the domestic inter-bank bond market to allow foreign institutions, but from the present situation, the real volume is not large. “In addition to the outside of the central bank, in fact, the investment agency of the real market is now no progress has been made, there is no real inter-bank operations.” Li Wei, macro analyst at Standard Chartered Bank, said the “Daily Economic News” reporter.
eight ministries of the “Notice” proposed to actively and steadily push forward the pilot of the foreign institutional investment in the inter-bank bond market, to further enrich the type of bond market investors. Speed up the construction of the bond market laws and regulations, provide a good environment for foreign entities to participate in inter-bank bond market. Steady development of the derivatives market, moderate promote the opening up of the derivatives market, to further deepen the market hedging, and the price discovery function.the
insiders “Daily Economic News” reporter pointed out that this may be prompted foreign institutional investment to direct investment the Bank of China (601988) bond market .
“notice” to expand in the issuance of RMB bonds outside the main range.
bilateral currency swap to provide support
people in the industry to accept the “Daily Economic News” reporter interviewed said that China’s market has a great attraction for foreign institutions.
“China’s economic growth performance is better than other countries, such a good economic growth will create a lot of investment opportunities.” said Li Wei. In addition, the RMB exchange rate or the domestic market “selling point” one.
Although this year against the dollar in a devaluation of the situation. However, the executive director of the China International Economic Relations Association, Tan Yaling “Daily Economic News” reporter from China’s economic structure and state of today’s devaluation of the yuan and not suitable for China’s present stage of development. Cui Xiaolong also said that in the long run, RMB there may be the trend of appreciation.
an industry on the “Daily Economic News” reporter pointed out that the appreciation of the yuan makes Chinese inter-bank bond market, foreign institutional investment more attractive. However, Cui Xiaolong, told reporters that out of consideration for the exchange rate risk, the case of freely convertible under the capital account has not yet realized, to allow foreign institutions to direct investment in China inter-bank bond market, the market with minimal impact.It is understood that the direct monetary transactions, only a few countries, which means that most foreign institutions to invest in the Chinese inter-bank bond market, must be the national currency converted into U.S. dollars and then converted into yuan, a complete the Fair four times swap.
eight ministries of the “notice” to do something about the support, pointed out the need to widen the yuan’s external use, actively and steadily push forward the capital account opening, and gradually make the yuan convertible under capital accounts. Further with the countries concerned to carry out a bilateral currency swap to support the wishes of the economies of the RMB as a reserve currency.
If more countries, a bilateral currency swap, or to expand the amount of bilateral currency swaps, no doubt weakened foreign institutions to invest in China’s renminbi bond market exchange risk, but this inevitably increases the arbitrage space.
“very U.S. dollar investment value of the yuan is very speculative value, because the system RMB speculative arbitrage great.” Tan Yaling, the “Daily Economic News” reporter. An unnamed insiders pointed out that he is not worried.
central bank window guidance is great, the size of the limit is in place, like a line of credit, position limits, done very well. foreign investment came to what purpose, the scale of how much, the relevant regulatory authorities will be very regulatory limit is in place, it is estimated that the introduction of a formal policy is not a problem. “the source said.
eight ministries of the “notice” to clear the channels for RMB back colleagues, also proposed to promote financial internationalization. Including timely guide to the outside to carry out international business insurance, securities and other financial institutions to promote the Chinese-funded financial institutions in offshore RMB business and RMB financial assets issued outside research to allow foreign institutions to issue stocks, bonds, funds in the territory, the gradual relaxation of the territory institutions in the issuance of securities abroad, broadening the channels of domestic investors, foreign investment in securities.
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