Reuters: US Dollar Report: China should quicken capital account opening -former c.bank head

Reuters: US Dollar Report Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

China should quicken capital account opening -former c.bank head Apr 3rd 2012, 11:09 BOAO, China, April 3 | Tue Apr 3, 2012 7:09am EDT BOAO, China, April 3 (Reuters) - China should relax capital controls more quickly to pave the way for the yuan currency to play a bigger role in the global monetary system, the head of the state pension fund and former central bank chief said on Tuesday. Dai Xianglong, the chairman of the National Council for Social Security Fund, also said that China may take five years or less to make significant progress in opening up its capital account. The fund manages the country's biggest pension fund worth 869 billion yuan ($138 billion). "China should speed up yuan convertibility on the capital account to make it become a currency that can be used with a purpose of investment," he said at the Boao Forum on the tropical Chinese island of Hainan. Dai's view was echoed by Jin Liqun, chairman of board of supervisors of China Investment Corporation, the country's $410 billion sovereign wealth fund. "It is probably time for China to consider relaxing capital account controls," Jin said. China's stable macroeconomic outlook provides favorable conditions for the opening-up of the capital account, he added. "On the one hand we do enjoy a very stable macro situation without the problems that happened to some of Asian countries in 1997 and 1998," he told the same forum in Hainan. "We should understand the seemingly beneficial outcome of this capital control would imply huge efficiency loss to our economy," he added. "Free capital is not culprit, the culprit is mismanagement." Beijing has been trying to improve the global clout of its currency by promoting the use of the yuan in cross-boarder trade and investment. It has also signed a series of bilateral currency swaps with foreign countries and added new currency pairs in the onshore market trading. Chinese central bank chief Zhou Xiaochuan said that Beijing may loosen overseas investment rules for private investors, less than a week after the government gave the go-ahead for pilot financial reforms in a coastal city. But many economists still say it will take a long time for the yuan to become a global reserve currency. China launched a yuan trade settlement programme in July 2009, using it as a starting point to gradually internationalise the currency, but the IMF has said that the currency cannot expect to become part of the basket of currencies it uses to denominate its reserves (SDRs) until it is more fully exchangeable. The trade settlement scheme was expanded to include 20 provinces and regions in 2010 and then nationwide. The central bank has recently announced to include all Chinese trading companies into the programme. But yuan-denominated trade was worth only about $300 billion in 2011 compared to total Chinese exports of $1.9 trillion, reflecting the fact that the currency remains tightly controlled by Beijing and is generally seen as substantially undervalued. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions