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China Policy-makers Lift Restrictions on Bond Purchase by Foreign Central Banks

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Published on : Jul 16, 2015

Recently China has announced its decision of lifting the restrictions, which it had earlier imposed on bond purchase. The Chinese policymakers are expecting a spurt of investment from foreign banks who has keen interest on yuan assets. 

Right after the formal announcement was made by the Chinese central bank on Tuesday, Jukka Pihlman, the head of sovereign-wealth funds and central banks at Standard Chartered Bank revealed that he was caught amidst a flurry of calls by foreign clients, following which he had to cancel his plan for the day. 

Jukka Pihlman also said that his list of clientele are very excited about prospects of entering into the US$6.1 trillion bond market. There is a robust demand for China bonds in the global circuit, revealed Mr. Pihlman, who also said that until recently investors had to go through a lengthy and lot cumbersome application process. 

Earlier it used to take investors several months, and many-a-times over a year to fulfil the complex application process and final foray into the Chinese bond market, said Pihlman who comes with an extensive experience of helping central banks to get stamp approvals. These approved stamps provided the banks a quota, which further restricted their purchase.

However, with the launch of the most recent set of rules, central banks, international financial institutions such as World Bank, and sovereign wealth funds will need to merely register with People’s Bank of China to get the approval on investing. The process is very simple and form has only two pages, revealed Mr. Pihlman, according to whom the process have remarkably easier than it was earlier. 

The free bond access in China, according to industry veterans will spur a new wave of investment in China’s onshore market of public sector. 

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