China Insight - Banking & Finance
One Step Forward to Internationalize Renminbi
As the global financial crisis continues, the exchange rate of major international currencies, e.g. the US Dollar and Euro, has experienced significant fluctuations in the recent years. This has brought substantial exchange rate risks to Chinese enterprises conducting business with the rest of the world. On the other hand, as China plays an increasingly important role in the world economy, the Chinese Government also has the intention to internationalize the local currency Renminbi ("RMB").
Starting from July 2009, China had launched a pilot program which allows RMB settlement in cross-border trade. Further, to facilitate cross-border investment, starting from year 2011, the People's Bank of China (the "PBOC"), the Ministry of Commerce (the "MOC") and the State Administration of Foreign Exchange (the "SAFE") promulgated several regulations to officially liberalize the cross-border use of RMB in capital account items, such as outbound investment, inbound investment and cross-border loans.
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