Zhou Xiaochuan, banks on currency trading

Zhou Xiaochuan, banks on currency trading


CHINA'S first national society for interbank market dealers was launched yesterday amid government efforts to expand the role of market forces in currency trading.
Zhou Xiaochuan, president of the People's Bank of China, called it "a milestone event" in the development of China's financial market at the opening ceremony and linked it to the famous Buttonwood Agreement signed between 24 of the most prominent brokers in the United States in 1792 to mark the beginning of the investment community of Wall Street.
China's interbank market has expanded rapidly over the past decade and covered a diversity of products including bonds, lending, bills, gold and forex, but the absence of a self-disciplinary non-governmental organization has increased the workload of the central bank and restrained the financial innovation and enthusiasm of market players, Zhou said.
By the end of August, the number of participants in the interbank bond market alone had surged from 16 in 1997 to 7,137. Dealers also diversified.
According to Zhou, the association will have the right to launch new financial products tapped by its members so long as the products are registered with the market regulators.
Zhou also lauded the contributions of the National Association of Securities Dealers to the American financial market.
Tan Yaling, an expert with the Bank of China, said Zhou's remarks indicated banking authorities hoped to borrow from western experiences and were aiming high.