Insurance companies allowed to trade forex funds
( 2003-09-18 08:51) (China Daily)
The State Administration of Foreign Exchange (SAFE) said yesterday insurance
companies, including foreign insurers operating in China, will be allowed to
trade their forex funds in the interbank market starting on October 1.
The move will help insurance firms better manage their forex funds, which are
mostly deposited in the banks, and improve their capability to settle claims,
the administration said.
After they obtain SAFE's approval, insurance firms can borrow or make loans
of no longer than four months at the Shanghai-based China Foreign Exchange Trade
System.
An insurer's total interbank forex borrowings or lendings cannot exceed 50
per cent of its owned forex capital, and single loans cannot be higher than 10
per cent of the borrower's forex capital or 15 per cent of the lender's forex
capital.
In June 2002 the trade system launched interbank forex services which can
"meet fairly well financial insitutions' needs to manage their foreign exchange
positions," the administration said.
Chinese insurers have long been lobbying the government for more freedom in
investing their indemnity funds, which they say is key to ensuring their
repayment capacities.
Insurance regulators are reportedly considering allowing insurance companies
to buy bonds in foreign markets.
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