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Policy:
The People’s Bank of China said it will maintain a 'neutral and prudent' monetary policy with reasonable growth in monetary credit, as well as keeping liquidity at 'a reasonable and stable level'. The remarks came after the central bank’s monetary policy committee concluded its fourth quarter meeting on December 29.'
Zhou Xiaochuan, governor of the PBoC, noted that preventing financial risk will remain high on the central bank’s agenda in 2018.
“[The PBoC will] fulfil its responsibilities as the office of the Financial Stability and Development Committee, and safeguard the bottom line of no systemic financial risks,” he noted in his new year message.
Meanwhile, Chinese president Xi Jinping emphasised his determination to continue to reform and open up the economy in his New Year message.
“2018 marks the 40th anniversary of China's reform and opening up policy,” he said. “The policy is the only way for modern China to make progress in its development as well as to realise the Chinese dream.”
Payments:
Businesses in Pakistan could use the renminbi in bilateral trades with Chinese counterparts, Pakistan’s central bank said in a January 2 statement.
“The renminbi is an approved foreign currency for denominating foreign currency transactions in Pakistan,” said State Bank of Pakistan (SBP). “In terms of regulations in Pakistan, the renminbi is at par with other international currencies such as the dollar, the euro and the yen, etc.”
SBP noted that it has taken several steps to facilitate RMB trade in the country, including allowing banks to accept RMB deposits, provide RMB loans, and obtain RMB financing from SBP in order to lend to local businesses with a need for the currency.
The renminbi was back as the sixth most used currency in global payments last November, overtaking the Swiss franc and Canadian dollar, according to Swift’s RMB tracker. The currency had a 1.75% share of all payments. The value of RMB payments was up 23.35% month-on-month, above the average gain among all currencies, which stood at 2.84%.
Cross-border usage of renminbi became more active in the third quarter of last year, according to Bank of China’s Cross-border RMB Index. The index finished the quarter at 257 points, up 28 points from the end of 2016.
Inflows into China’s capital markets were a major driver for the index’s growth, with RMB inflows for securities investments standing at Rmb149.2bn ($23bn) in the period, up from Rmb4.1bn in the first half of 2017.
“The increased attractiveness of domestic bonds and capital markets of China gave rise to more active cross-border securities investments with RMB funds,” the bank said in a December 25 report.
IMF:
Renminbi accounted for 1.12% of central banks’ allocated reserves in the third quarter of 2017, according to the International Monetary Fund’s Currency Composition of Official Foreign Exchange Reserves (COFER) data. RMB allocations went up from $99.65bn in the second quarter of 2017 to $107.94bn in the third quarter.
COFER gathers information from 149 countries about their holdings of foreign currencies. The survey presented figures for RMB holdings for the first time in the last quarter of 2016, following the RMB's inclusion in the IMF special drawing rights basket.
MRF:
Chinese and international banks have welcomed plans to launch a mutual recognition of funds programme (MRF) between China and the UK, according to the Hong Kong Monetary Authority.
Participants of the Hong Kong-London Financial Services Forum 2017, which took place on December 18, welcomed the feasibility study on a UK-China MRF – announced at the end of the 9th UK-China Economic and Financial Dialogue two days earlier. The two countries also agreed to hold a UK-China RMB internationalisation dialogue in London in 2018.
The December 18 forum was attended by senior representatives from various banks, including Bank of China, Barclays, Citi, Deutsche Bank, HSBC, Industrial and Commercial Bank of China and Standard Chartered.