What will happen under the capital accounts reforms?
Under the capital account reforms, qualified domestic institutions are enabled to conduct the following types of investment activities:
· Commercial banks can invest in foreign fixed-income financial products by pooling and converting into foreign currency Renminbi funds held by domestic institutions and individuals.
· Domestic insurers can invest in both foreign fixed-income financial products and foreign money market instruments by converting a percentage of their existing Renminbi assets into foreign currency.
· Mutual funds and securities institutions can invest in foreign securities, including stocks, by pooling limited amounts of foreign currency held by domestic institutions and residents. Current account changes include the following:
· Procedures will be simplified and limits increased for foreign exchange purchases by domestic individuals.
· Enterprises will be able to establish, modify or close current accounts directly with commercial banks, without prior approval, and hold greater amounts of foreign exchange. When a ‘true need’ exists, enterprises can make advance purchases of foreign exchange, without having to wait until payments are due.
· For trade in services, approvals for foreign exchange purchases and remittances will be relaxed and simplified.
|
