BIS Papers No 15 China’s capital account liberalisation: international perspectives

Monetary and Economic Department

April 2003

The papers in this volume were prepared for a BIS/SAFE seminar of central bankers, scholars and market participants held in Beijing on 12-13 September 2002. The views expressed are those of the authors and do not necessarily reflect the views of the BIS, SAFE or the central banks represented at the meeting. Individual papers (or excerpts thereof) may be reproduced or translated with the authorisation of the authors concerned.

Requests for copies of publications, or for additions/changes to the mailing list, should be sent to: Bank for International Settlements Press & Communications CH-4002 Basel, Switzerland

E-mail: [email protected] Fax: +41 61 280 9100 and +41 61 280 8100 This publication is available on the BIS website (www.bis.org).

© Bank for International Settlements 2003. All rights reserved.

ISSN 1609-0381 (print) ISBN 92-9131-645-8 (print) ISSN 1682-7651 (online) ISBN 92-9197-645-8 (online)

Table of contents

List of participants...... iii

Introduction Guonan Ma and Robert McCauley ...... 1

Summary Wang Yungui and Xie Yuelan ...... 7

Welcome speech: gradually and steadily promoting China’s capital account liberalisation Ma Delun ...... 12

Overview Capital account liberalisation in China: international perspectives André Icard ...... 14

Capital account management and its outlook in China Zhang Xiaopu ...... 19

Opening China’s capital account amid ample dollar liquidity Guonan Ma and Robert McCauley ...... 25

Japanese experience Capital account liberalisation: the Japanese experience and implications for China Mitsuhiro Fukao ...... 35

Several observations on capital flows in Japan Richard Koo ...... 58

Bank-related capital flows The experience of Italian banks: from strict controls to full liberalisation Antonello Biagioli ...... 62

Liberalising the capital account without losing balance: lessons from Korea Yoon Je Cho and Robert N McCauley ...... 75

Singapore’s policy of non-internationalisation of the Singapore dollar and the Asian dollar market Ong Chong Tee ...... 93

Corporate and non-bank flows France’s experience of exchange controls and liberalisation Françoise Drumetz ...... 99

Global integration and capital account liberalisation in South Africa James H Cross ...... 104

Liberalisation and management of the private non-bank corporate capital account: the Philippine experience Celia M Gonzalez ...... 117

BIS Papers No 15 i

Equity portfolio flows Operationalising capital account liberalisation: the Indian experience Gopalaraman Padmanabhan ...... 123

An overview of the Taiwanese qualified foreign institutional investor system Karen Lu ...... 141

Offshore banknote flows The Federal Reserve Bank of New York’s experience of managing cross-border migration of US dollar banknotes Joseph Botta ...... 152

Experience of cross-border movements of Deutsche mark banknotes Stefan Hardt ...... 163

Offshore use of currency: Hong Kong’s experience Wensheng Peng and Joanna Y L Shi ...... 166

ii BIS Papers No 15

List of participants from outside mainland China

Banque de France Deputy Director Françoise Drumetz [email protected] Balance of Payments Directorate Deutsche Bundesbank Cash Department Stefan Hardt [email protected] Hong Kong Monetary Authority Head of Economic Research PENG Wensheng [email protected] Division Reserve Bank of India General Manager Gopalaraman [email protected] Exchange Control Department Padmanabhan Ufficio Italiano dei Cambi Head of the Statistical Antonello Biagioli [email protected] Department Bank of Japan Senior Manager Setsuya Sato [email protected] International Department Manager Hiroshi Akama [email protected] International Department Keio University, Japan Professor Mitsuhiro Fukao [email protected] Faculty of Business and Commerce Nomura Research Institute, Japan Chief Economist Richard Koo [email protected] Sogang University, Korea Professor of Economics Yoon Je Cho [email protected] Graduate School of International Studies Bank Negara Malaysia Deputy Governor OOI Sang Kuang [email protected] Bangko Sentral NG Pilipinas Director of International Celia M. Gonzalez [email protected] Operations Department The Monetary Authority of Singapore Assistant Managing Director ONG Chong Tee [email protected] Monetary Policy and Investments Assistant Director GOH Chin Hwee [email protected] Monetary Management Division

BIS Papers No 15 iii

South African Reserve Bank Former Senior Deputy Governor James Cross [email protected] JP Morgan Vice President Karen Lu [email protected] Taipei Branch Federal Reserve Bank of New York Senior Vice President Joseph Botta [email protected] Financial Services Group

Bank for International Settlements Deputy General Manager André Icard [email protected] Head of Banking Department Robert Sleeper [email protected] Chief Representative Shinichi Yoshikuni [email protected] Asia and the Pacific Representative Office Deputy Chief Representative Robert McCauley [email protected] Asia and the Pacific Representative Office Senior Economist Guonan MA [email protected] Asia and the Pacific Representative Office Senior Relationship Manager Miranda Tam [email protected] Asia and the Pacific Representative Office

iv BIS Papers No 15

List of participants from mainland China

State Administration of Foreign Exchange (SAFE) Deputy Director General MA Delun Deputy Director General LI Dongrong Director, General Affairs Department DENG Xianhong Deputy Director, General Affairs Department CHEN Xianping Deputy Director, Capital Account Management Department CHEN Bingcai Deputy Director, Information Centre WEN Sili General Affairs Department WANG Yungui General Affairs Department HUANG Hao General Affairs Department MI Lin General Affairs Department XIE Yuelan Capital Account Management Department ZHANG Xiaopu Capital Account Management Department SUN Qiumei Capital Account Management Department WANG Ning Capital Account Management Department ZHOU Haiwen International Department ZHAN Xu International Department XIAO Sheng Zhejiang Branch CHEN Jinxiang Fujian Branch ZHENG Xuguang Guangdong Branch CAO Fengjian Jiangsu Branch WANG Ying Beijing Branch LI Zili People’s Bank of China Deputy Director General, International Department HE Jianxiong International Department ZHU Jun International Department ZHANG Zhengxin International Department WANG Dan International Department CAO Zhihong International Department ZHONG Liang Deputy Director General, Research Department CAI Haoyi Research Department LU Fuling Research Department DING Zhijie Monetary Policy Department WANG Yu Monetary Policy Department YU Ming The Chinese Academy of Social Sciences Institute of World Economics and Politics HE Fan

BIS Papers No 15 v