China will improve 'policy framework' for cross-border yuan use

[BEIJING] China's central bank said on Monday that it will improve the "policy framework and infrastructure" for cross-border use of the yuan and boost the Chinese currency's role in investment and reserves.

The People's Bank of China (PBOC) reaffirmed that it will improve the yuan regime and steadily push forward with the yuan's convertibility on the capital account.

In improving the policy framework for cross-border use of the yuan, China will pay "equal attention to development, reform and risk prevention", the PBOC said in a statement posted on its website.

The PBOC also said it aims to enhance the role of the yuan in investment, reserves and financial transactions, No details of any new policies were given.

Monday's statement quoted Yi Gang, a vice central bank governor, as telling a meeting on cross-border yuan business that China's steady economic growth will be a cushion for the process of making the yuan an international currency.

China will steadily achieve its goal on yuan internationalisation, which is a long-term strategy, Mr Yi said.

The central bank will guide the development of offshore yuan market, Mr Yi added.

Late last year and early this year, China imposed some curbs on capital outflows, which affected the pace of yuan internationalisation In 2016, the yuan weakened 6.5 per cent against the resurgent US dollar. So far this year, the yuan has strengthened about 1 per cent against the US dollar.

Usage of the yuan in key international centres fell 10.5 per cent last year, hitting a 29-month low in December 2016, a proprietary index compiled by Standard Chartered showed last month.

REUTERS