|
CNBC'S MOST SHARED
- Investing in Tech Now
- Apartment Vacancy Rate Hits 22-Year High
- Warren Buffett's Complete Sun Valley CNBC Interview - Transcript and Video
- Warren Buffett Tells CNBC Consumer Sales Remain "Very, Very Soft"
- What You'll See On My NASCAR Documentary Tonight
- Warren Buffett: Economy Needs Another Dose of Viagra
- Software Giants Rush to Cash In on Carbon-Trading
- Preparing for Retirement
- Cramer?s Outrage
- Man in the Middle of it All
- China Demands Currency Reform, France Backs Debate
- China Accuses Rio Staff of Bribing Steelmakers
- Assets Are Less Toxic, but Banks Have Other Troubles
- Chevron Says Q2 Hit by US Refining, Weak Dollar
- Stimulus Critics Put Obama, Democrats on Defensive
- Warren Buffett: Consumer Sales Remain 'Very, Very Soft'
- Japan Deflation Deepens as Wholesale Prices Tumble
- Infosys First-Quarter Profit Rises 17%, Beats Estimates
- Google CEO Sees Chrome Netbook News Later This Year
- Warren Buffett's Complete Sun Valley CNBC Interview - Transcript and Video
- Warren Buffett Tells CNBC Consumer Sales Remain "Very, Very Soft"
- July 10th in Market History
- Microsoft Plays a Game of Bing Pong
- Options Smell 'Blood' on Infosys
- Christmas in July: Consumers To Out-Scrooge Scrooge
- GM's Second Chance
- Art Cashin: Traders Weigh Obama Policy Changes
- Warren Buffett: Economy Needs Another Dose of Viagra
.ll_medium.jpg)
Text Size 
Foreign banks will be able to buy or borrow yuan from Chinese mainland lenders for the first time to settle trade in Hong Kong and Macau under a pilot scheme steered by the central bank.
The central bank chiefs of China and Hong Kong signed a memorandum on Monday, paving the way for the scheme, which analysts say is a step toward greater international use of the yuan.
According to detailed rules published on Thursday by the People's Bank of China, foreign banks settling imports and exports in yuan in Hong Kong and Macau will be allowed to buy Chinese currency from mainland banks within certain limits.
The PBOC did not disclose the quotas, which it will set.
The rules make clear that China will be checking to ensure that banks and companies do not try to use the pilot program to get round the country's capital controls.
To that end, any yuan loans must be supported by trade documentation.
"Domestic settlement banks should take effective measures to know the nature and purpose of their clients' trading," the PBOC said.
 |
Exporters will be allowed to keep their yuan earnings outside China, according to the rules, which took effect on Wednesday.
Chinese banks will also be allowed gradually to extend trade finance in yuan to overseas companies, the PBOC said.
The program will initially be piloted by about 440 firms in Shanghai and the southern province of Guangdong, media reports have said.
The PBOC statement said the rules would apply to a separate yuan-settlement trial between the Association of South East Asian Nations and the Yunnan and Guangxi regions in southern China.
Chinese export firms involved in the trial will continue to qualify for export tax refunds.
Usually, companies need to provide documentation showing they are being paid in dollars in order to receive tax rebates.
Zhao Qingming, an analyst at China Construction Bank in Beijing, said the pilot scheme would increase demand for the yuan, adding to pressure for the currency to appreciate in the longer term.
"But for now, the trade will be conducted on a trial basis. So the volume will not be very large and the impact on China's international payments will be limited," Zhao said.
Print
Email
Data is a real-time snapshot *Data is delayed at least 15 minutes