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Chinese banker forecasts yuan to liberalized
09-06-2011 13:10
Chinese banker forecasts yuan to liberalized
Chinese banker forecasts yuan to liberalized

Chinese government might have yuan’s convertibility under the capital account in five years. This was announced by China Construction Bank chairman Guo Shuqing, The Wall Street Journal says. Guo Shuqing noted that this does not mean the regulations to be cancelled completely. However, the cross-border transactions are expected to become easier, which will increase yuan’s importance on the global financial market. Currently foreign investors and local companies have to obtain permissions for exchange transactions. This is arranged in order to prevent higher inflation and to avoid any kind of discrepancy in the global economy, The Wall Street Journal says. Together with yuan liberalization loan interest rates are going to alter as well. At the moment they are lowered deliberately in order to stimulate demand on the internal market. When it rises, profit of the companies can drop substantially. Recently the US and other western countries are negotiating with China about currency liberalization. Yuan rate has been attached to the dollar rate for a long time. In 2005 Beijing loosened it, but returned the rate regulation in 2008 in order to decrease the influence of the financial crisis. Lower yuan rate ensures inconvenient position of China’s foreign partners. China owns the world’s biggest gold and foreign exchange reserves used for national currency rate regulation. In March they amounted to $3 trillion. In 2001-2005 Guo Shuqing was head of China National Bank responsible for gold and foreign exchange reserves of the country. Later he became the director of China Construction Bank – second-largest bank in China. Shuqing is considered to be one of the main candidates for China Central Bank head position.

 

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