ecns [expanded by feedex.net]: PBOC mulling new unit to invest forex; report

ecns [expanded by feedex.net]

ecns

PBOC mulling new unit to invest forex; report
http://www.ecns.cn/business/2013/08-07/76352.shtml
Aug 7th 2013, 07:48



2013-08-07 16:48 Caijing Web Editor: yaolan


The People's Bank of China is working on a plan to create a new government agency to invest its $3.5 trillion of foreign exchange reserves abroad more effectively, the South China Morning Post reported, citing two sources close to the central bank.


The new agency would be in addition to the China Investment Corp, the nation's sovereign wealth fund, the report said.


Central bank governor Zhou Xiaochuan has already assigned a division head of the State Administration of Foreign Exchange (SAFE), the country's foreign exchange regulator, to lead a small team to study the feasibility of such a unit, according to the sources.


Zhou is in favour of the idea of a parallel platform but some officials at the SAFE fear that would gnaw away at the power of the regulator.


The central bank is heeding calls to establish such a new unit from senior officials and experts, who are unhappy with CIC's poor returns, the scmp said. The CIC posted a 10.6 percent return on its overseas investment in 2012, compared with a negative 4.3 percent return in 2011 and an average of 5.02 percent since 2007.


The new agency would manage most of the country's forex, the sources said. Once it is finalized, it will be submitted to the State Council for approval, they added.


The SAFE, which currently takes the lead in managing and investing foreign reserves abroad, is under the PBOC while the CIC, which handles only a slice of foreign reserves, reports to the cabinet.


In formulating a new platform, a new shareholding company like CIC is unlikely due to concerns related to public information disclosure, the scmp said, citing the sources.





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