China
The People’s Bank of China (PBoC) signed a Rmb190 billion (US$30.6 billion) currency swap deal with Brazil, said the regulator in a statement on its website on March 27. China’s central bank said the three-year swap agreement will only be used in case of a credit crisis and could be rolled over after expiration.
The China Banking Regulatory Commission (CBRC) unveiled a series of new controls on wealth management products to increase transparency and reduce risk on March 27. Onshore financial institutions must clearly link wealth management products with the assets that proceeds are invested in. For already-issued products with assets that don’t meet the new standards, banks should take provisions for losses by the end of this year.
PBoC issued a statement on March 19 formally granting Qualified Foreign Institutional Investors (QFIIs) access to the onshore interbank bond market, which constitutes 95% of total onshore bonds. This comes almost nine months after the China Securities Regulatory Commission (CSRC) revised the QFII rules on July 27, 2012 to allow QFIIs to invest in the same interbank market.
The CBRC has drafted a guideline to boost the risk control of local governments’ financing vehicles, according to the Shanghai Securities Journal on March 14. The guideline reiterated that the authority will control the total volume of loans that go to local governments’ financial vehicles (LGFVs) demanding that the volume should not surpass the level of late 2011, which is Rmb9.1 trillion.
The CSRC has expanded a programme allowing financial institutions registered in Hong Kong and the Hong Kong units of Chinese banks and insurers institutions to raise renminbi offshore for investment in China via the Renminbi Qualified Foreign Institutional Investor (RQFII) programme. The regulator also expanded the range of products participants can invest in beyond exchange-traded stock funds and bonds.
India
On March 23, India's federal government simplified the rules for investments by foreign institutions in local debt. The changes, which will be effective from April 1, will retain the limits on investments by foreigners in government bonds at US$25 billion and corporate bonds at US$51 billion, and remove a complicated system of subcategories within these two sections that had throttled foreign investment.
The Securities and Exchange Board of India (Sebi) is actively considering a proposal put forward by the Association of Mutual Funds in India (AMFI) on the introduction of a product labeling system for mutual funds and long term mutual fund policies. The system will color-code products to highlight risks and is to be applied to all mutual fund documentation.
Philippines
The Bangko Sentral ng Pilipinas (BSP) released on March 26 three new indices which measure the nominal and real effective exchange rates of the peso relative to the currencies of the following groups of countries: all major trading partners of the Philippines covering merchandise exports and imports; trading partners in advanced countries; and trading partners in developing countries, according to a press release on its website.
The BSP implemented a new framework in compiling and reporting the country’s balance of payments (BOP) statistics in accordance with Balance of Payments and International Investment Position Manual, 6th edition, according to a press release on its website on March 22. This initiative is aligned with the international best practice of using the standards prescribed by the International Monetary Fund (IMF).
Singapore
The PBoC signed a new bilateral currency swap arrangement with the Monetary Authority of Singapore (MAS), according to a press release on its website. The size of swap facility was doubled from Rmb150 billion to Rmb300 billion. The agreement will be effective for three years, and can be extended by mutual consent.
South Korea
The new chairman of the Financial Services Commission (FSC) pledged on March 22 to overhaul the governance system at financial groups, according to the Korea Times.
Je-yoon Shin is planning to create a task force including experts from academia, the financial sector and civic groups as soon as possible to discuss reforming the governance structure at financial firms. The FSC is also expected to embark on efforts to replace heads at financial firms.
Vietnam
The State Bank of Vietnam (SBV) has asked local credit institutions to provide monthly reports with regard to their investments in corporate bonds, entrusted lending and lending rates for prioritised sectors, including agriculture and rural areas, small-to-medium-sized enterprises (SMEs), said the central bank said in a post on its website on March 13. The central bank aims to collect such information to better direct, monitor and control lending expansion of the banking system in 2013.