Daily Management Review

Yuan Allowed To Be Remitted Into China For The First Time By An International Bank HSBC


Yuan Allowed To Be Remitted Into China For The First Time By An International Bank HSBC
A change in rules of remittance of the yuan by the Chinese authorities in January saw the first ever international bank assisting in remittance of the currency from a foreign country.
Yean was remitted from Australia back to mainland China by a Chinese national with the help of HSBC bank. This was announced by the bank on Wednesday.
According to people conversant with the rules of remittance of the currency from and into China, this transaction is a sign that the drive of internationalizing the yuan was being pursued by the Chinese authorities and is being expanded, albeit cautiously.
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Money by Chinese nationals, attempting to send money back to China, could previously only be remitted back into China if the currency was converted into other currencies.  This rule was however changed by the Chinese central bank -  the People’s Bank of China in a circular that was issued by it on January 5 this year.
The most recently available data from the World Bank states that following India, the country to receive the second largest remittance inflow was China in 2016 when US$61 billion was sent back into the country.
“By opening up cross-border RMB transactions to individuals, China is adding new impetus to the international use of its currency,” said Helen Wong, HSBC’s Greater China chief executive in a statement. The statement carried an abbreviation for the renminbi which is another name for the yuan.
JP Morgan was selected by the PBOC to be the first non-Chinese bank that would be playing a role for money remittance globally. This was announced by the central bank in a separate move through a statement on its website.
It has been a long-drawn policy and goal of the central bank to encourage a wider and greater use of the yuan.
However, following the sudden devaluation of the yuan by the Chinese authorities in August 2015 dampened the enthusiasm and willingness of companies to use the yuan to a greater degree as well as the focus of the Chinese authorities on creating policies for such encouragement.
New impetus is being added by China for the use of the yuan internationally through the policy of opening up of the cross-border RMB transactions for individual Chinese nationals abroad.
The policy of the internationalization of the yuan is apparently gathering pace as has been evident from the change in the policy in this regard on January 5.
“We see recent encouraging signs that renminbi internationalisation could make a subtle return to being a policy focus,” said Standard Chartered analysts in a note commenting on the rule change.
“Overall, while the bias is still towards inflows over outflows, the authorities appear ready to re-accelerate renminbi internationalisation after a setback since 2015.”
According to the circular published by the central bank in January, foreign organizations would be permitted to make use of the yuan for the purpose of trading of carbon emissions domestically in addition to allowing of individual Chinese nationals to remit money to China in yuan. The circular also made some changes in the use of the yuan for foreign direct investments.

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