BEIJING — China has approved RMB convertibility on the capital account within a prescribed limit of $10 million for the Tianjin, Guangdong and Fujian free trade zones (FTZs), the central bank said on Dec 11.
The move represents a historic step by China to open up its capital accounts. China allowed RMB convertibility on the trade accounts nearly two decades ago, but almost all capital account transactions in the mainland are under varying degrees of control.
It came less than two weeks after the RMB was admitted by the International Monetary Fund into its Special Drawing Rights basket alongside the dollar, euro, pound sterling and yen on Nov 30.
For each domestic institution outside of the negative list, the cap was set separately for both the cross-border revenue and the expenditure on yearly basis, the People’s Bank of China said in guidelines issued on the day, aiming to provide financial support to the FTZs.