China to Tighten Control on Inflows of Overseas Funds

Discussion in 'Wall St. News' started by ASusilovic, Nov 9, 2010.

  1. Nov. 9 (Bloomberg) -- China will force banks to hold more foreign exchange and strengthen auditing of overseas fund raising as part of efforts to crack down on hot-money inflows.

    The State Administration of Foreign Exchange will tighten management of banks’ foreign-debt quotas and introduce new rules on their currency provisioning, the regulator said in a statement on its website. The government will also regulate Chinese special-purpose vehicles overseas and tighten controls on equity investments by foreign companies in China, it said.

    The measures underscore concern around the world that the Federal Reserve’s decision last week to buy its own debt to keep borrowing costs near zero will cause investors to seek higher yields in emerging markets. Chinese and European leaders have said they plan to discuss the impact of quantitative easing at the Group of 20 summit this week in Seoul as well as the dangers of competitive currency devaluations.