China busts illegal money transfers of over 800b yuan: People's Daily
[SHANGHAI] China started a crackdown on underground banks in April and has so far busted over 170 cases of money laundering and illegal fund transfers involving more than 800 billion yuan (S$177.4 billion), official People's Daily reported on Friday.
Illegal flows of such "grey capital" have not only impacted China's foreign exchange management system, but also seriously disturbed the country's financial and capital markets order, the Communist Party's mouthpiece said in an article published on its website.
Although the crackdown, launched jointly by China's police, foreign exchange regulator and the People's Bank of China, has made some progress, illegal activities of China's underground banks are spreading and the situation is still grave, the article said.
In one illegal money transfer case, the biggest discovered in China so far, about 410 billion yuan worth of Chinese money had been transferred overseas using non-resident accounts, exploiting regulatory loopholes and bypassing oversight, according to the article.
China's central bank and foreign exchange regulator have also been moving to restrict channels by which money can legally leave the country, in order to keep the money supply stable and lower domestic interest rates to spur growth.
If Chinese companies and individuals continue to sell yuan to buy dollars, it reduces the amount of yuan available for lending and thus puts upward pressure on rates.
Sources told Reuters on Wednesday that China has moved to restrict trade at offshore yuan clearing banks, stepping up capital controls even as Beijing positions its currency for inclusion in the International Monetary Fund's reserve basket.
The IMF is set to decide whether to include the yuan at the end of the month. IMF sources told Reuters that the yuan will likely be included in the basket, but at a lower ratio than originally expected thanks to a change in methodology.
China's central bank and commercial banks bought a net 12.9 billion yuan worth of foreign exchange in October, data showed on Sunday, stemming heavy sales in the previous three months that underlined capital outflows.
REUTERS
No comments:
Post a Comment