China aims to make RMB more freely usable

WASHINGTON - China will take a series of reforms to further increase the capital account convertibility of renminbi, and make yuan, a more freely usable currency, governor of the People's Bank of China (PBOC) Zhou Xiaochuan said on Saturday.

In a statement at the 31st meeting of the International Monetary and Financial Committee meeting held in Washington, Zhou said that China will further expand cross-border investment channels for individual investors, such as via pilot program of Qualified Domestic Individual Investor.

The country will also introduce Shenzhen-Hong Kong stock connect program, relax foreign exchange regulations, facilitate access to the Chinese capital markets by overseas institutional investors, and further facilitate the international use of renminbi, he added.

Zhou said that China will adopt a concept of managed convertibility in order to limit risks from cross-border capital flows and safeguard the stable value of the currency and a safe financial environment.

This year, the International Monetary Fund (IMF) will conduct review of including yuan into the basket of the Special Drawing Rights (SDRs). On Friday, Zhou told reporters that the evaluation process of the renminbi's inclusion is proceeding, and China would speed up relevant reforms to promote the process.

SDRs are international foreign exchange reserve assets. Allocated to nations by the IMF, an SDR represents a claim to foreign currencies for which it may be exchanged in times of need.

According to the IMF, the selections of currencies for the SDR basket are based on two criteria -- the size of the country's exports and whether its currency is freely useable, and the latter requires a certain degree of capital account convertibility.

Zhou said that there are only a few capital account items that are completely inconvertible, adding that this year China plans to launch a series of reforms that will target currently inconvertible items under the capital account, with the aim of further promoting capital account liberalization and making renminbi a more freely usable currency.

Commenting on China's current economic conditions, Zhou said China's macro-financial condition remains stable, while the economy is facing some downward pressure.

He reiterated that the Chinese government will maintain continuity and stability of the monetary policy to ensure reasonable credit growth and liquidity, continue proactive fiscal policy, and stay vigilant on nonbank financing.

In regard to real estate policy, Zhou said China will continue to implement a differentiated housing mortgage policy to support the healthy housing demand.