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China's Bohai Bank launches forex reform

(Xinhua)
Updated: 2007-03-21 15:41

Tianjin-based Bohai Bank has been given approval from the country's foreign exchange regulator to carry out business in foreign exchange without quota management controls, bank sources said.

The bank will be the first in China to be able to sell more foreign exchange than it purchases.

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Currently, the amount of foreign exchange sold each day cannot exceed or must match the amount of foreign exchange purchased by banks in China that are authorized to carry such business, according to the State Administration of Foreign Exchange (SAFE).

"The reform is a breakthrough in China's foreign exchange management," said Meng Hao, director of the international finance research center at Tianjin University of Finance andEconomics.

Last September, SAFE approved Tianjin Binhai New Area as a center for new foreign exchange reforms. The reforms include the loosening of controls over foreign exchange in capital accounts and exploring ways of makingRenminbicapital accounts convertibleunder certain circumstances and up to certain amounts.

China is using financial reforms in the hope of turning Binhai New Area into its third economic engine following Shenzhen andShanghai's Pudong, the economic powerhouses of the country's southern and eastern coastal areas.

The Binhai New Area, situated 120 kilometers southeast ofBeijingand covering an area of 2,270 sq km, generated 160 billionyuan (20.6 billion U.S. dollars) ingross domestic productin 2005.

Bohai Bank was founded last year with registered capital of 5 billion yuan (645 million U.S. dollars).