SAFE to Tighten Control over Domestic Foreign-exchange Accounts of Overseas Institutions
May 6, 2009
China’s State Administration of Foreign Exchange (SAFE) released on May 5, 2009, for public comment, the Circular on Issues Concerning the Administration of Domestic Foreign-exchange Accounts of Overseas Institutions (Circular). The Circular will regulate the establishment and use of domestic foreign-exchange accounts of overseas institutions.
Under the Circular, domestic banks must designate all foreign-exchange accounts with a “NRA” (NON-RESIDENT ACCOUNT) label when establishing foreign-exchange accounts for overseas institutions. The bank must also differentiate banks and non-bank institutions among the overseas institutions. The Circular further specifies that account holding institutions and individuals will not be permitted to deposit or withdraw foreign-currency cash from the NRA foreign-exchange accounts.
The Circular is open to public comment until May 19, 2009.
(Source: State Administration of Foreign Exchange)
The State Administration of Foreign Exchange (SAFE) recently issued the Notice on Examination and Ratification of Short-term External Debt Quotas of Financial Institutions in 2009 (“Notice”), which discloses the examination and ratification scheme for short-term external debt quotas of financial institutions in 2009. The Notice also clarifies the scale, specifications, and purposes of short-term external debts.
SAFE noted that the management of short-term external debts implemented this year was for the purpose “maintaining growth, guarding against possible risks, and promoting balance,” using the methodology of “ensuring the controllability of an increase in the overall scale and taking into account the efficiency and fairness of the individual institutions.” SAFE has adjusted the short-term external debt quotas of national-level Chinese and foreign-funded banks with legal person status and the quotas of various regions. The examined and ratified short-term external debt quotas of financial institutions total US$32.9 billion, representing a 12 percent increase over that in 2008.
The Notice attaches special importance to the financing of trade activities. According to the scheme, the Chinese and foreign-funded financial institutions entitled to the incremental quotas should make use of the total quota increment to support the financing of imports and exports of domestic enterprises. The quota increment of the various regions shall be used preferentially to support financial institutions with a larger volume of trade settlement. These measures will help facilitate the guidance policy on short-term external debt management, as well as ensuring the healthy and stable development of China’s foreign trade.
The Notice makes clear that SAFE will transfer its authority for examining and ratifying quotas of financial institutions for those who have a close relation to the development of the local economy and quotas in need of timely adjustment. SAFE will delegate its authority to its local branches so as to further increase efficiency in the use of short-term external debt quotas and bolstering regional economic development.
(Source: State Administration of Foreign Exchange)
