China’s central bank said it hasn’t issued any documents about cross-border yuan remittances for individuals after a report that some lenders were approved to offer the service.
The People’s Bank of China’s Shenzhen branch said in a statement on its website yesterday that the report was “not in line with fact.” Apart from saying no document had been issued, the regulator’s two-line statement didn’t give any other details on how the report was inaccurate.
The Wall Street Journal reported yesterday, citing unidentified people familiar with the matter, that the central bank’s Shenzhen branch issued a directive dated Feb. 14 allowing individuals to transfer as much as 80,000 yuan ($12,700) a day overseas through accounts with Chinese lenders’ branches in the southern city bordering Hong Kong.
The central bank has previously said it will explore cross-border yuan transactions for individuals’ accounts. Allowing people to remit yuan to accounts outside China would increase the channels for overseas investment and help increase the Chinese currency’s role internationally.
“Sooner or later China needs to relax the controls on individuals’ yuan remittance,” Li Wei, a Shanghai-based economist with Standard Chartered Bank, said by telephone. “It would begin with experimental steps. Whatever risks might be there, trials need to be done.”
Individuals in China are currently allowed to buy with their yuan no more than the equivalent of $50,000 in foreign currencies a year for remittance overseas. They may not remit yuan. Institutional investments from overseas into China require regulatory approvals.
To increase the amount of yuan circulating overseas, China has already helped to establish an offshore yuan market in Hong Kong and promoted settlement of trade with other countries in the Chinese currency. The central bank has also reached currency-swap agreements with countries including Turkey, Malaysia and Thailand.
China’s central bank said in its fourth-quarter monetary policy report that it will “explore” cross-border yuan transactions for individuals. Last month, its statistics department said in a report that China has a “strategic opportunity” now to relax restrictions on capital flows. The government has yet to outline how it may ease controls on cross-border capital flows.