Domestic and foreign capital accounts will be allowed for businesses in the Shanghai Free Trade zone, along with cross-border financing, in order to lower the exchange costs and risks for the firms, the People’s Bank of China said in a statement Monday. Renminbi and foreign currencies could be freely convertible once the mechanism is mature. Meanwhile, the central bank will continue to promote wider use of the Chinese currency, through moves such as allowing financial institutions provide yuan settlement for cross border e-commerce. Financial institutions and companies in the zone can secure renminbi financing offshore and use it for non-capital market investment, the statement said. The PBoC also added that it will simplify the management of foreign currency and deepen the pilot program for international trade settlement center to boost transactions.
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