Shanghai Issued Cross Border Financing Rules To Promote Facilitation Of Investment And Financing In Pilot Areas

February 12th, the people's Bank of China Shanghai The headquarters issued the detailed rules for the implementation of the macro Prudential Management of China (Shanghai) free trade trial division Account Financing offshore financing and cross border capital flows (hereinafter referred to as the Implementing Rules), comprehensively opening the cross border financing of foreign capital and foreign currency, eliminating the pre financing approval of overseas financing, changing the supervision after the event, and applying the new management mode such as risk transfer factor to enrich the function of free trade (FT) account.

The implementation of the implementation rules has promoted the facilitation of investment and financing in the pilot area, and further reduced the financing cost of enterprises. More importantly, it has become an important step in promoting the convertibility of China's capital account, and the internationalization process of RMB has further accelerated.

　 Holding low cost Global Funds

The implementation rules have consolidated the management system for offshore financing of foreign currencies, further improved the relationship between foreign debt and liquidity management under the macro Prudential framework, and laid the foundation for exploring the convertibility of financial reforms under the subsequent capital account.

"The implementation rules" have been fully liberalized in the scale and category of overseas financing, thus extending only to the various enterprises in the FTA, including banks, insurance, securities and other financial institutions, raising the leverage ratio of the main body from overseas financing, expanding the scale of corporate loans from capital to two times, and financing the renminbi and foreign currencies to the international market on the basis of financing currencies. Zhang Xin, deputy director of the Shanghai headquarters of the people's Bank of China and President of the Shanghai branch, concluded at the policy conference of the day that the rules have fully realized the opening of foreign capital channels for enterprises and financial institutions, and the convertibility of capital accounts has basically been realized, and the next step will be extended to individuals.

At the same time, the implementation details of the reform of overseas financing prior approval is for post supervision. It is worth noting that the implementation details use the risk transfer factor creatively, including the deadline risk conversion factor, currency risk conversion factor and category risk transfer factor, to guide the offshore financing structure of the economic entity. This new way of management encourages enterprises and financial institutions to use Renminbi, medium and long term funds to support the real economy and discourage short-term financing. In addition, the rules also include the off balance sheet financing in the scope of overseas financing.

As one of the experimental fields of RMB innovation business, Shanghai FTA has ushered in the past year. cross-border funding The new opportunities, including RMB external loans, two-way Renminbi pool, cross-border RMB centralized payment, and other innovative business rules have landed.

In May 2014, the free trade account system was officially put into use. At present, 13 Chinese and foreign banks have access to the free trade account system and more than 10000 free trade accounts. The total amount of RMB foreign loans accumulated by the enterprises in the region is 120, the amount is 19 billion 700 million yuan, the interest rate is only 4.2%, which is significantly lower than the domestic financing interest rate, which greatly reduces the financing cost of enterprises.

"After a series of new business attempts, the average price of FT loans in the district is 15% lower than that in the domestic market, which can effectively reduce the financing cost of enterprises." Relevant officials of the Bank of China said that the rules were an important attempt to manage foreign debt on the basis of separate accounting, broadening the financing channels for enterprises and financial institutions and expanding the scale of financing. In addition, the rules differentiated the weights of different types of loans in foreign currency, long term and short term, and through weight management, it could more effectively cope with the impact of cross-border capital flows.

"According to the existing regulations on foreign debt management, foreign currency and local currency, short-term and long-term external debt belong to multiple regulatory departments respectively, each of which has its own regulatory system. There are different control requirements for the quota setting, approval process and quota usage of foreign debt, which is generally inconvenient for the business community." A representative of a Chinese funded enterprise said at the press conference that the rules gave the right of overseas financing to the Chinese and foreign enterprises for the first time. The scale of integration can be converted by enterprises according to their own capital strength, foreign financing leverage ratio and macro Prudential policy parameters. Through various risk conversion factors, the liabilities of different nature, currency and time limit can be reduced to one limit, and the enterprises in the region can freely decide to integrate into the foreign currency and short-term long term loans. With the support of the rules, enterprises can reasonably arrange domestic and foreign foreign and domestic currency financing structure according to their own operating income and currency and maturity structure, so as to optimize the financial arrangement.

Capital account convertibility process needs to be accelerated

Since the establishment of the Shanghai free trade area in September 2013, its effectiveness has been emerging for more than a year. The FTA has initially set up an innovative institutional framework suited to facilitate trade and investment facilitation in FTA, and a part of the contents of the financial reform and opening up has also been copied and promoted throughout the country.

"More importantly, the implementation details become an important step to promote RMB capital account convertibility. The process of free convertibility of RMB capital accounts needs to be accelerated so as to form mutual dependence and promotion with the RMB going out. Tu Guangshao, standing committee member and deputy mayor of Shanghai Municipal Committee, said.

In the past 2014, the internationalization of RMB has made rapid progress. Now it has become the fifth largest payment currency in the world, and the offshore RMB center is covered by the whole time zone.

"In the past year, the cross-border business of RMB has been developing rapidly in Shanghai. Data show that Shanghai accounted for 18% of the total cross-border RMB payment business last year. Among them, fta The RMB cross-border business accounts for 18% of Shanghai's total value. Tu said.

Tu said: "at present, the acceleration of RMB internationalization is in line with the national strategic interests. Therefore, the capital account convertibility process must follow up, which can make RMB's overseas holding, use and reflux form a good benign circle."