PBOC hints at opening offshore yuan trade to domestic banks
(27 June 2016 – China) The People’s Bank of China (PBOC) said it is considering allowing domestic banks to participate in offshore yuan trade, as the country looks to project greater influence in the offshore currency market.
In recent times, China has gradually loosened its capital controls in efforts to promote international use of its currency, however, domestic banks can only participate in the offshore market through overseas subsidiaries, with trading kept separate from the tightly-controlled domestic yuan market.
The PBOC said that it was investigating the possibility of allowing local commercial banks trade directly in offshore yuan in order to increase the two-way opening up of the foreign exchange market.
According to the central bank, any policy change will be gradual.
China's foreign exchange regulator said earlier this year that it will take steps to develop its currency trading systems and promote the unification of yuan exchange rates in onshore and offshore markets.
The China Foreign Exchange Trade System (CFETS), a subsidiary of the PBOC, said earlier this month it was preparing to open branches in London and New York to promote the yuan's global status.
CFETS said in a statement that by expanding its network offshore, it aims to serve more overseas institutions and become a "main trading platform and pricing centre" for the yuan globally.
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