New department in the China’s Central Bank
A foreign exchange rate department was created in the People’s Bank of China with the aim to determine currency policy and control international capital flows. This announcement made by the bank was confirmed by the State Council, China’s Cabinet and issued at the website of the central bank. Previously the currency policy related to the monetary policy department of the bank. But according to the China Securities Journal the action undertaken by the monetary policy department were insufficient. The main purpose of this new department is to arrange joint work of those branches of monetary policy department and of the State Administration of the Forex that work with foreign exchange and other corresponding issues.
However according to the experts there will unlikely be any changes in the present foreign exchange policy pursued by the China as the responsibilities of the new body are not new ones. Due to Zhao Oingming a senior analyst at China Construction Bank this move only combines all of the related actions into one place. He has also mentioned that this move shows us the concerns of the China about the role of its currency in decreasing inflation, unstable global markets and growing international capital flows. However the great changes may still take place in case the policy makers will not lose their great will for changes.
The responsibilities of the new body will consist of: defining the exchange rates for yuan or renmibi and control over its implementation; define and implement forex market regulations and controls; control over the demand and supply at the domestic forex market; contribute to the creation of the offshore yuan market; proved assistance to other governmental bodies in making the policies for capital account convertibility; control over the changes of exchange rates at the world markets; control over the international capital flows.
However there are still no plans concerning the development of offshore yuan market. New body will also have to cooperate with the National Development and Reform Commission and the Ministry of Finance with the purpose to improve the economy monitoring. Furthermore this body will contribute to the cooperation of other governmental branches. The final decision on important issues will however be up to the cabinet.
