PBOC Formulates Further Policy Initiatives to Promote RMB as an International Currency

On 2 December 2013, the People’s Bank of China (“PBOC”) issued its Opinions on Financially Supporting the Development of the China (Shanghai) Pilot Free Trade Zone (the “Opinions”).

The Opinions represent latest steps by PBOC to formalize the policy framework within the boundaries of which we expect applicable PRC government authorities to implement detailed rules to further promote the use of RMB in transactions carried out with Shanghai Free Trade Zone (“Zone”) residents.

This client alert highlights the following important features of the Opinions:

Free Trade Accounts -

Paragraph 2 of the Opinions permits an individual or company which is a resident in the Zone (a “Zone Resident”) to establish and maintain a RMB- or foreign currencydenominated ‘resident free trade account’ (“Resident FTA”) with banks in the Zone for the purpose of carrying out certain types of cross-border direct inbound and outbound investments and financings (as described below). A non-PRC resident may also establish and maintain a RMB- or foreign currency-denominated ‘non resident free trade account’ (“Non-Resident FTA”) with banks in the Zone for the same purpose.

Please see full alert below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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