Shanghai liberalises offshore yuan borrowing in free-trade zone
Rules for offshore yuan borrowing in Shanghai's new free-trade zone are set out by People's Bank of China, marking a key financial liberalisation
The mainland's central bank has allowed companies based in Shanghai's free-trade zone (FTZ) to conduct offshore yuan borrowing, taking an initial step towards drastic financial liberalisations inside the high-profile testing ground for further economic reforms on the mainland.
The People's Bank of China unveiled an operational guide yesterday governing cross-border yuan businesses throughout the 28.78 square kilometre zone, the first detailed rules related to financial deregulation inside the zone.
With the guide, banks and companies will finally be aware of what business they can conduct in the zone.
The central bank is set to announce new rules about the long-heralded liberalisation of the yuan's capital account in the zone in coming weeks, according to PBOC officials.
The operational guide on cross-border yuan business reflects Beijing's stepped-up efforts to internationalise its currency while giving a boost to Hong Kong, the dominant offshore yuan centre, as more mainland companies will seek yuan borrowing in the city.
The nearly 10,000 companies based in the zone will be allowed to borrow as much as 1.5 times their registered capital from abroad.
Banks inside the zone have also been encouraged to ease their clients' settling of trade deals by simplifying business procedures.
