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Central Bank narrowed part of the foreign institutions the finance channel

Central Bank narrowed part of the foreign institutions the finance channel

18th reports the rules of suspension of offshore renminbi clearing bank and the participating banks through domestic RMB account financing between Bank and bond repurchase transactions, securities times, confirmed the news to foreign investors.  It is revealed that the banks that are suspended in the domestic bank financing, part of the main line is one of the four overseas branches and foreign RMB participating banks.  

securities times, the news, confirm with the Bank, but at the time had not yet received a reply.  

Societe Generale Chief Economist, Lu zhengwei said the Central Bank's move should be macro-prudential considerations, aimed at stabilizing the currency interbank RMB through a control channel and size limit renminbi cross-border arbitrage and raise the cost of shorting offshore market for Yuan exchange rate.

"the Central Bank may monitor, some foreign banks in the domestic interbank market, including through integration into the bond pledge repurchase the intervention of the Central Bank's stable exchange rate of RMB capital operation, so only temporarily narrow financing channels in the territory.  "The above foreign banks said.

but insiders said the Central Bank's temporary measures on overseas clearing bank and participating banks had limited effect.  Particularly repo transactions outside business this year to the clearing bank and participating banks, and by slow progress in opening and other factors, successful participation in the onshore interbank bond repurchase fewer foreign banks.

in addition to opening process and other external factors, foreign banks themselves also limits the territory of bond pledge repurchase transactions. "Foreign banks in the domestic interbank market bond repurchase, a prerequisite is to have enough domestic debt interest rate pledge, but most foreign banks interest rate debt is small; in addition, the RMB participating banks abroad and the power of leverage is weaker.  "The above foreign banks said.

from the perspective of cost of capital, from the territory of RMB funds into advantages more obvious.  A State-owned big line engaged in across border Yuan business of people said, yiqian outside Yuan funds cost than territory of cost to low many, but since this year yilai, with Bank times drop associate cut, domestic of loose currency environment makes both inside and outside Yuan funds cost poor gradually received narrow, sometimes territory funds cost even below outside cost, and in territory Bank between bonds market through bonds repo financing of cost is more low.

"outside the Central Bank may be concerned that some banks through domestic financing, low-cost ' hoarding ' currency, thereby shorting the Yuan, resulting in devaluation of the Renminbi. When George Soros shorted when the Thai baht was from Thailand banks borrowed a large number of Thai baht and focus on the devaluation of the Thai baht crisis after massive selling.  "Lu zhengwei said.

General view of the market, and resolution in the International Monetary Fund has not yet met the key currency in the SDR basket, the Central Bank will take many forms a stable RMB exchange rate. It was reported that before the Group of 20 leaders Summit, members of the group, including China promised, in an effort to promote economic growth at the same time, boycott currency devaluation.