BEIJING, Dec. 11 (Xinhua) -- China has approved RMB convertibility on the capital account within 10 million U.S. dollars for the Tianjin, Guangdong and Fujian free trade zones (FTZs), the central bank said on Friday.
This is a significant step by China to open up its capital accounts. China allowed RMB convertibility on trade accounts nearly two decades ago, but almost all capital account transactions on the mainland are under varying degrees of control.
The move also came less than two weeks after the RMB was admitted by the International Monetary Fund into its Special Drawing Rights basket alongside the dollar, euro, pound sterling and yen on Nov. 30.
For each domestic institution outside of the negative list, the cap was set separately for both the cross-border revenue and the expenditure on yearly basis, the People's Bank of China said in guidelines issued Friday.
The central bank supports FTZs to promote cross-border use of the yuan.
The guidelines encourage banks in the FTZs to deal with transactions between RMB and foreign exchange derivatives.
Cross-border RMB investment funds are welcomed in Fujian FTZ, while cross-border RMB transactions between non-banking financial institutions and the Hong Kong and Macao regions are permitted in Guangdong FTZ.
The guidelines also support institutional investors in Hong Kong and Macao to launch qualified domestic limited partnerships (QDLP) in Guangdong FTZ, raising RMB capital in the zone to invest in the Hong Kong capital market. Enditem