People’s Bank of China Deputy Governor Yi Gang also holds the position as administrator of the State Administration of Foreign Exchange (SAFE). There is an interesting interview with him in Caixin Online (Caixin is a Beijing-based media group providing financial and business news and information).
- Says his latest priority is to curb growth of China’s foreign reserves, he wants to put the reserves to work through efficient investment
- SAFE has thus launched an investment agency called China Reform Holdings Corp. Ltd. and opened an office to coordinate forex reserves-related loan activities
- Yi also discusses China’s effort to balance international payments
- Also reform the process by which authorities adjust the yuan-foreign currency exchange rate.
Yi says the yuan’s exchange rate is approaching an equilibrium level “which means attention has shifted from the Chinese currency’s appreciation to the government’s interest in building a market-driven rate-adjustment system that is flexible and requires little if any central bank intervention”
The interview is here:
Opening the capital account via a “convertible currency” is another financial reform issue that’s attracted considerable attention and more than average controversy. The government first announced plans for a free-floating yuan 17 years ago, but so far there has been no breakthrough. The next step, he said, will have to be guided by the market.