Banking News
- Nation to inspect banks' short-term foreign debt
Date: 27-Jun-2007 Sources: (Shenzhen Daily)
CHINA will inspect banks' foreign loans 'soon?in a nationwide push to ensure they abide by currency controls and to restrict overseas capital from inflating the country's stock and property market, the regulator said.
Banks should prepare and conduct self-inspection of their compliance of laws concerning short-term foreign debt, the State Administration of Foreign Exchange (SAFE) said in a statement on its Web site yesterday.
The administration has penalized 19 local banks and 10 foreign banks for breaking foreign exchange regulations in an inspection that started last year, the statement said, without naming the banks and specifying the penalties.
'Some overseas speculative capital has managed to flow into China under the guise of trade and investment. Some has even gone into the domestic property and stock markets, with an impact on macro-economic controls and the healthy development of the economy,'Deng Xianhong, the deputy head of the SAFE, said in a statement published on the regulator's Web site.
SAFE chief Hu Xiaolian said monitoring short-capital inflows would continue to be a priority for the regulator, which is anxious to deter speculators from betting on a rise in the yuan.
The yuan is not generally convertible for purely financial purposes not related to trade and direct investment purposes.
'Investigation of capital inflows without an underlying trade need, as well as bloated exports, is a key task of China's foreign exchange management in the near term,'said Hu, who is also a vice central bank governor.
The discovery of the irregular inflows followed a check of foreign exchange transactions in 10 provinces from January 2006 to March 2007.
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