Wu Xiaoling, vice governor of the
People's Bank of China or the central bank, said China is planning a
forex-managing entity to manage the huge amount of foreign exchange
reserve in Beijing March 3, 2007. [CIIC file] |
A top central bank official said Saturday China
has begun preparations to create an entity that will manage China's massive
foreign exchange reserves.
Vice Governor Wu Xiaoling said the entity will be related to Central Huijin
Investment Co, a state agency that has invested foreign exchange reserves to
recapitalize domestic financial companies.
China had $1.07 trillion in forex reserves as of the end of 2006 and has
actively been exploring ways to diversify its holdings.
In remarks on the sidelines of the annual Chinese People's Political
Consultative Conference, which opened Saturday, Wu said China was mulling
creation of a fiscal stability fund.
No timetable was provided for creating the entity to manage the foreign
exchange funds. Wu said the timing will depend on progress of the preparations.
Asked whether the forex-managing entity will be modeled after Singaporean
investment agency Temasek Holdings, Wu said many options are being considered
but declined to elaborate.
There has been speculation China would widen the yuan trading band as it
deals with the problem of excess liquidity, but Wu said the issues are being
viewed separately.
"The liquidity issue doesn't include the trading band issue," Wu said.
Wu said China should boost the development of corporate bonds but the size of
the bonds should depend on how much corporations and the markets can handle.
"The government shouldn't set a specific limit," Wu said.
