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| China mulls first offshore currency market | |
| Press Trust Of India / Beijing August 17, 2008, 17:41 IST | |
Buoyed by the growing influence of the Chinese economy and strength of the Yuan, the government is set to establish an offshore currency market with Hong Kong and Shanghai in the race with Tianjin, the front-runner as a possible location.
The Chinese currency, Yuan, though still not fully convertible, will be traded among foreign companies and institutions as well as domestic players, who will be guaranteed tax benefits.
Though Chinese policymakers have not yet decided on the location of the offshore currency market, Tianjin, a booming northern port city is reportedly the top choice.
But given its advanced financial infrastructure, Shanghai could be the ultimate winner, China Daily reported.
Hong Kong, a former British colony, now a Special Administrative Region under China, which many market-watchers speculated on, may not be considered at all, the state-run newspaper said.
The People's Bank of China (PBOC) said this week that it had already set up a special exchange rate policy department and will develop "an offshore Yuan market in keeping with the process of the currency's internationalisation".
The new department will focus on administering foreign exchange, regulating domestic foreign exchange market, conducting analysis on the global foreign exchange market and international capital flows and advising to policy makers, the central bank said in a statement on Thursday.
The department will focus on foreign exchange policymaking and the State Administration of Foreign Exchange will implement the policies, Ma Ming, senior economist with the Beijing Institute of Technology, said.
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