Developments in the Shanghai Free Trade Zone (SFTZ) are picking up pace. Last Thursday, the PBoC’s Shanghai office issued the long waited implementation details on Free Trade Accounts (FTA). The new regulation immediately allows RMB transactions using the FTA for current account business, foreign direct investment and cross border lending, while taking a step-by-step approach towards other transaction types, which will be subject to further implementation rules. In essence, the latest developments reaffirm our thinking that the RMB within the SFTZ will operate in a similar manner to the offshore RMB (CNH).
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