The first batch of multinational companies integrate domestic and foreign currencies

Capital State learned that on March 12, the People’s Bank of China and the State Administration of Foreign Exchange decided to launch the first batch of pilot projects for the integrated domestic and foreign currency fund pool business of multinational companies in Shenzhen and Beijing to further facilitate the overall planning and use of cross-border funds for multinational companies and corporate groups. Support the construction of a new higher-level open economic system and enhance the ability of financial services to serve the real economy.

The country’s first domestic and foreign currency integrated fund pool pilot landed-Shenzhen

integrated fund pool pilot landed-Shenzhen

In Beijing, the Business Management Department of the People’s Bank of China is actively implementing the pilot work. Recently, it has selected Sinochem Corporation, COFCO Corporation, China General Technology (Group) Holdings Co., Ltd., Aviation Industry Corporation of China Co., Ltd., and Shell Group. A total of 5 qualified multinational companies with high credit ratings participated in the first batch of pilots.

In Shenzhen, according to the announcement yesterday by the People’s Bank of China’s Shenzhen Central Sub-branch, Shenzhen Transsion Holdings Co., Ltd. received approval and became the first Shenzhen enterprise in the country to carry out a pilot project for the integration of local and foreign currency capital pools for multinational companies.

The relevant person in charge of the Business Management Department of the People’s Bank of China stated that the pilot program refers to the centralized operation and management of domestic and foreign domestic and foreign currency funds by qualified multinational companies. This pilot is an integration and upgrade of the existing domestic and foreign currency fund pool policies. It combines the advantages of the two fund pool policies to appropriately raise the barriers to entry while releasing greater policy dividends, facilitating the coordinated use of cross-border funds by multinational companies.

The main contents of this policy include: unifying domestic and foreign currency policies; implementing two-way macro-prudential management; further facilitating the transfer and use of funds; realizing willingness to purchase foreign exchange within a certain amount; strengthening supervision during and after the event.

The relevant business person in charge of the Shenzhen branch of the State Administration of Foreign Exchange explained that large-scale entity multinational companies that have obtained the pilot qualification will enjoy a better combination of cross-border fund management policies, which can not only expand the cross-border two-way financing space for enterprises, but also facilitate foreign exchange settlement. On the basis of the realization of willingness to purchase foreign exchange within a certain amount, enterprises are given more options for capital exchange.

What is the capital pool business?

The so-called fund pool business is a fund management tool commonly used by multinational enterprise groups. It can improve the efficiency of fund operation and reduce the group’s external financing dependence through the centralized deployment and use of corporate funds within the group, thereby reducing the overall financing cost of the group.

Previously, the local currency and foreign currency cross-border fund pool business was in charge of different departments. Among them, the foreign currency cross-border fund pool business is managed by the State Administration of Foreign Exchange, and the RMB cross-border fund pool business is managed by the central bank, and the two businesses have independent business rules. As a result, cross-border renminbi payment and foreign currency fund pools are always in a state of separation from each other, and enterprises cannot realize renminbi cross-border payments through foreign currency fund pools, and the transaction process is greatly hindered.

It is reported that the pilot companies in Beijing responded positively. Sinochem Group quickly handled the first foreign currency foreign debt borrowing business on the day of completion of the pilot business registration, amounting to 10 million U.S. dollars, and directly transferred the foreign currency foreign debt funds to the foreign currency accounts of domestic member companies. Foreign exchange settlement and use; COFCO, General Technology Group and Aviation Industry Group also handled cross-border domestic and foreign currency centralized receipts and payments, RMB overseas lending, and willing foreign exchange purchases on the day of completion of the filing, achieving full coverage of business types and full implementation.

In the next stage, the relevant person in charge of the Business Management Department of the Central Bank stated that the People’s Bank of China and the State Administration of Foreign Exchange will further improve the management framework of the integrated domestic and foreign currency fund pool business of multinational companies based on the pilot situation and policy effects, and continuously improve the convenience of cross-border trade and investment and financing Level, create a good business environment, and promote the steady and healthy development of foreign-related economies.

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