Will open a branch at the new FTZ.
Bank of China Ltd, China's fourth-largest bank by assets and one of the Big Four state-owned banks, also expects overhauls in cross-border use of China’s renminbi to be introduced in the Shanghai free trade zone. BOC has already received government approval to set up a branch in the zone, which is seen as a testing ground for broader financial reforms that will be rolled out gradually across China.
The People’s Bank of China, the central bank, has already drafted a plan covering capital-account and interest-rate liberalization that will be implemented over the next two to three years in the FTZ. Companies operating in the FTZ will be allowed to maintain a special bank account that permits free movement of capital in and out of China.
There will, however, be a "firewall" to keep funds inside the FTZ from being moved freely into other parts of China. BOC vice president Chen Siqing, believes the FTZ could become the next offshore renminbi market. Hong Kong is currently the main center for offshore renminbi transactions. He said BOC’s cross-border renminbi settlements business US$438 billion from January to September, up 56% compared on-year.
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