The People's Bank of China (PBOC)recently authorized some foreign-funded banks, which operate the Renminbi currency business in Pudong, Shanghai, to enter into the national inter-bank lending market. This represents another move on the part of China to open up the financial sector gradually.

It has been learned that authorized to enter into China's inter-banking lending market are the Shanghai branches of 8 foreign-banks: Industrial Bank of Japan, Dai-Ichi Kangyo Bank, Citibank, Standard Chartered Bank, Hong Kong Shanghai Bank, Banque Indosuez, Sanwa Bank and Tokyo Mitsubishi Bank.

Directly organized and regulated by the PBOC, China National Inter-bank Lending Market is a monetary market between financial institutions, in which the National Interbank Lending Center makes available the transaction system and information services and the Central Treasury Bond Registry and Settlement Company Ltd. offers bond custody and settlement services. Financial institutions, which are authorized by the PBOC to enter into this market, will conduct inter-bank lending and bond transactions and buy-backs according to uniform transaction and settlement rules; they shall conduct their own settlement activities at their own risks.

    It is learned that, ever since foreign-funded banks in Pudong, Shanghai started to engage in the Renminbi currency business operations in April 1997, their Renminbi interbank lending have taken place through the Shanghai financing center. After one year of operation, the conditions are now ripe for foreign-funded banks to enter into the national inter-banking lending market. After their entry into this market, these eight foreignfunded banks can use the interconnected computer system, provided by the national interbank lending center, to conduct Renminbi inter-bank lending transactions with trading banks. In addition, they can add to their business bond trading and buy-back activities while, through the network, they can have access to such information as statistical data and the background information and creditworthiness of a certain trading bank.