Expanded Offshore "Cash Pool" Needed To Internationalize China's Yuan: Expert
March 03, 2012 17:41 PM
Expanded Offshore "Cash Pool" Needed To Internationalize China's Yuan: Expert
BEIJING, March 3 (Bernama) -- An expanded offshore "capital pool" of China's yuan, or renminbi, is needed to promote wider international use of the currency, a senior investment banker who is also a member of China's top advisory body has suggested.
To increase the amount of yuan offshore, the Chinese government needs to create more channels for investing in yuan overseas and offer varied yuan-denominated investment products, Fang Fang, a member of the Chinese People's Political Consultative Conference (CPPCC) and vice chairman of J.P. Morgan Asia Investment Banking, told Xinhua news agency on Friday.
"Last year, I submitted a proposal aimed at facilitating the transfer of yuan between domestic and offshore markets, including expanding the yuan pool in Hong Kong," said Fang, who will attend the annual session of the CPPCC National Committee starting on Saturday.
"Some of my advice has been put in place since then, but more efforts remain to be made in expanding the offshore pool of Chinese currency," he said, adding that his proposal this year will mainly focus on this issue.
Fang said that as one of the most important offshore yuan markets, Hong Kong saw a slowdown in the growth rate of its renminbi deposits, which increased less than one-fold last year, compared with fourfold in 2010.
There were three reasons for the slowdown: reduced expectations for the yuan's appreciation, a decline in trade settlement due to slowdown in growth of Chinese exports, and limited investment opportunities in the offshore yuan market, Fang said.
As for how to increase the yuan pool, he proposed bolstering investment channels and options for the currency so as to attract more investors to put money into the offshore yuan market, thus securing a sufficient supply of the yuan.
This entails allowing investors to use the yuan for direct investment overseas and adding variety to yuan products, including introducing yuan-denominated assets and bulk commodities, the senior banker said.
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Expanded Offshore "Cash Pool" Needed To Internationalize China's Yuan: Expert
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