By Li Yanping
Jan. 6 (Bloomberg) -- China’s central bank and foreign- exchange regulator today warned of rising risks to the nation from “abnormal” capital flows caused by the worst financial crisis since the Great Depression.
“Due to the world economic recession and financial turbulence, the abnormal movement of cross-border capital will bring potential risks,” the State Administration of Foreign Exchange said in a statement on its Web site. “The direction that the flows will take is largely uncertain.”
Falling interest rates and a halt in gains by the yuan against the dollar have brought the risk of an exodus of cash from China as investors seek better returns elsewhere. The nation’s foreign-exchange reserves, the world’s largest, fell for the first time in five years because of the crisis, a government official, Cai Qiusheng, said last month.
“Their reserves are so large that they could offset any outflows fairly easily,” said Mark Williams, an economist at Capital Economics Ltd. in London.
China’s currency reserves stood at $1.9 trillion at the end of September. The role of that stockpile as “the last protection” against economic risks must be preserved, the currency regulator said, saying that it will improve the management of the money.
China will set up an early-alert system for monitoring capital flows and “further improve the emergency protection system” for the international balance of payments, the regulator said.
The nation will step up oversight of individuals moving money in and out of the country, the central bank said in a separate statement today. It will also strengthen scrutiny of trade payments to make sure they’re genuine and study measures to tackle “abnormal changes” in the balance of payments, it said.
The two agencies issued the statements after their annual work conference ended today.
To contact the reporters on this story: Li Yanping in Beijing at yli16@bloomberg.net
Posts
No comments:
Post a Comment