China central bank to consider a conditional replication Shanghai FTA debt management approach to the country
Reuters, Beijing, August 18 - China's central bank orderly capital account convertibility is expected to be down a move. Three sources said on Tuesday, the central bank consider replicated Shanghai FTA debt management approach adopted to the country, that the abolition of foreign debt for approval, in accordance with a certain percentage of corporate capital to the discretion of foreign bonds gold.
"Conditional gradually promote FTA debt management approach to the country, to broaden the extent of capital account convertibility, can also be included in SDR (Special Drawing Rights) corresponding institutional basis for the renminbi." A source said.
He also said, which reflects the foreign debt financing and risk prevention of domestic institutions to facilitate regulatory reform ideas.
Reuters China's central bank has been contacted on the matter, yet to get their comments.
Sources said that Shanghai FTA pilot has accumulated a certain amount of risk management experience to be considered timely promotion, and with the interest rate and exchange rate market to further accelerate the pace of reform, capital account convertibility coordinate the promotion of internal demand is also appropriate upgrade.
At the same time, interest rates are now expected appreciation of the US dollar, relatively speaking, a rational enterprise, may not have foreign currency debt of the impulse, even relaxed the amount, it is not willing to dollar financing, debt liabilities surge and the possibility of runaway debt risk are relatively small ʱ??
The source also said, to strengthen management at the real trade background, to prevent false trade arbitrage, the need to strengthen the monitoring, if the liabilities of the foreign currency, foreign currency exchange rate fluctuations may occur arbitrage trading.
The central bank Shanghai headquarters released in February this year, Shanghai FTA split accounting business overseas financing and cross-border capital flows prudent macroeconomic management implementation details (Trial), which allows companies and financial institutions can independently carry out activities outside financing, and increase economic agents from the region leverage foreign financing, financing scale enterprises from the capital to expand to twice doubled.
The rules and regulations, local corporate and non-banking financial institutions may optionally apply a pattern in foreign debt and foreign borrowing under the existing management model and rules of prudent macro management mode.
For a long time, China has been implementing the scale of foreign debt management, foreign debt can not exceed the size of "poor bets" (registered capital and total investment balance range), domestic enterprises and foreign debt and foreign financial institutions need to get the country approved by the NDRC or SAFE External debt indicators. May this year, the NDRC has canceled debt of corporate issuers credit approval.