On Friday China's central bank, the People's Bank of China,
issued new foreign currency regulations in a bid to facilitate
individual foreign exchange transactions.
The regulations come into effect on February 1, 2007 and impose
an annual quota on foreign exchange settlements of individuals.
This abolishes the previous limit for every single settlement
transaction.
For transactions within the annual quota individuals can handle
foreign exchange settlements directly with a bank.
Beyond the quota settlement transactions in current accounts
must be inspected by a bank and those completed through capital
accounts are subject to the foreign exchange authorities.
The annual quota will simplify the procedures for individual
foreign exchange settlements, said a central bank spokesman. He
explained that China placed an annual quota on foreign exchange
purchases by individuals in May. This resulted in an increase of
210 percent in purchases from May to November over the same period
of last year.
The new regulations aim to facilitate foreign exchange flows in
personal trade by allowing individuals to open settlement accounts
and treating personal traders in the same way as trading
companies.
No quotas are imposed on foreign exchange settlements or the
purchases of personal traders registered with the commerce
authorities. The regulations also provide guidance for capital
account transactions of individuals.
Mainland residents can entrust banks, fund management companies
and other domestic institutions to invest in financial products
overseas including stocks and bonds, say the regulations.
The annual quota also applies to capital account foreign
exchange settlements and the purchases of individuals.
China will gradually relax restrictions on capital account
foreign exchange transactions as the country continues to make the
Renminbi convertible through such accounts, said the spokesman.
The foreign exchange authorities will improve the monitoring of
foreign exchange transactions taking a particular interest in those
that are substantial or suspicious. They'll also crack down on
money laundering and other criminal activities, explained the
spokesman.
(Xinhua News Agency December 30, 2006)