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Central Bank Announces Management Measures For RMB Settlement Of Foreign Direct Investment

2011/1/14 10:13:00 49

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Central Bank'S Overseas Investment RMB Settlement

The people's Bank of China announced 13 days to cooperate.

Cross-border Trade

RMB settlement pilot to facilitate banking industry

Financial institution

Overseas direct investment with domestic institutions

RMB settlement

The people's Bank of China has formulated the "administrative measures for the RMB settlement of foreign direct investment" (hereinafter referred to as the "measures").

The measures shall be carried out from the date of promulgation.

Banks and enterprises in the pilot areas for cross border trade settlement of RMB will be able to carry out pilot projects for RMB settlement of foreign direct investment.

It is clear that all domestic enterprises permitted to carry out overseas direct investment can make overseas direct investment in Renminbi. Banks can directly handle RMB settlement business for enterprises based on the approval documents or documents of overseas direct investment authorities, and the relevant financial services formalities are more convenient.

The people's Bank of China, the State Administration of foreign exchange and the competent department of foreign direct investment establish a mechanism of information sharing and supervision cooperation, strengthen supervision afterwards, and strengthen the responsibility of auditing the authenticity of banks.

The regulations stipulate that the sum of Renminbi and foreign exchange funds that the foreign direct investment that banks handle for domestic institutions can not exceed the total amount of foreign direct investment approved by the competent department of foreign direct investment.

The initial cost of Renminbi which has been remitted abroad by domestic institutions should be included in the total amount of overseas direct investment.

The bank should deduct the amount of the initial cost of the Renminbi that has been remitted when it pacts renminbi funds for the domestic institution.

Banks should submit information on cross border payment of RMB pre payment fees to the RMB cross-border payment and payment information management system.

The method also stipulates that within 6 months from the date of the repatriation of the Yuan's initial cost, the competent department of foreign direct investment has not been approved by the foreign direct investment department, and the domestic institution should return the remaining funds to the domestic Renminbi account of the original remittance fund.

Banks should urge domestic institutions to pfer the remaining funds back to the domestic Renminbi accounts of the original remittance funds.

If a bank refuses to be refunded, the bank shall file a record with the local people's Bank.

Lian Ping, chief economist at Bank of communications, said that investing abroad in Renminbi marked a new step in the use of RMB outside China.

The central bank's move will expand the willingness of enterprises to invest abroad.

Moreover, it will directly invest in Renminbi and repatriate profits in Renminbi, allowing investment enterprises to lock in exchange rate risk.

In addition, facilitating domestic institutions' outward FDI in Renminbi is another step towards internationalization.

Guo Tianyong Guo Tianyong, director of the China banking research center of Central University of Finance and Economics, pointed out that, from the domestic perspective, the introduction of the measures is beneficial to ease domestic inflation pressure and capital bubble pressure.

At present, the pressure of liquidity management in our country is relatively large. The introduction of the measures can make some liquidity investment overseas, thereby easing the pressure of liquidity.