China increases flexibility for banks dealing with foreign exchange

By Yi Yi Wu and Wendy Liu

The People’s Bank of China (PBOC) released the Administrative Measures for the Foreign Exchange Purchase and Sale Business Provided by Banks on 22 June 2014, which will come into force on 1 August 2014. The measures will clarify the definition of business and adjust the supervision and management model to provide banks with greater autonomy and a simplified process to market entry and exit.

The measures will repeal the Interim Administrative Measures for Foreign Exchange Purchase and Sale Business of Designated Foreign Exchange Banks and the Notice of the People’s Bank of China on the Administration of Foreign Exchange Purchase and Sale Business.

The measures define business by dividing it into ‘spot foreign exchange purchase and sale business’ and ‘Renminbi and foreign exchange derivative business’, for which separate management standards apply…

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