- Marc Quintyn, Bernard Laurens, Hassanali Mehran, and Tom Nordman
- Published Date:
- September 1996
© 1996 International Monetary Fund
Library of Congress Cataloging-in-Publication Data
Monetary and exchange system reforms in China : an experiment in gradualism / Hassanali Mehran … [et al.]. —
p. cm. — (Occasional Paper ; 141)
Includes bibliographical references.
1. Finance — China. 2. Monetary policy — China. 3. Banks and banking — China. 4. China — Economic policy — 1976- I. Mehran, Hassanali. II. Series: Occasional paper (International Monetary Fund) ;
332.1 ’0951—dc20 96-34203
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The following symbols have been used throughout this paper:
… to indicate that data are not available;
-- to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist:
- between years or months (e.g., 1991–92 or January-June) to indicate the years or months covered, including the beginning and ending years or months;
/ between years (e.g.,1991/92) to indicate a crop or fiscal (financial) year.
“Billion” means a thousand million.
Minor discrepancies between constituent figures and totals are due to rounding.
The term “country,” as used in this paper, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term alsocovers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.
This IMF Occasional Paper traces the monetary, exchange, and financial sector developments in China since 1978, when the country embarked upon a far-reaching reform of its economic system. The paper reflects the continuous involvement of its authors, as well as of a number of other IMF staff and outside consultants on China, going back to 1991. The staff advisory work in the areas covered by this paper initially focused on central banking and commercial banking legislation, with contributions by Tobias Asser (Assistant General Counsel, Legal Department), and with the participation of Manuel Guitián and Justin Zulu (Directors, Monetary and Exchange Affairs Department (MAE)), William Holder (Deputy General Counsel), Leonard Gleske (member of the Board, Bundesbank), Didier Bruneel (Secretary General, Bank of France), Akira Nambara (Executive Director, Bank of Japan), and J. De Beaufort Wijnholds (Executive Director, IMF), as well as Hassanali Mehran and Marc Quintyn. Bernard Laurens integrated the material into the section dealing with legal issues in this paper.
The development of the exchange markets reflects a series of missions and parallel workshops organized for this purpose. Masaru Tanaka, Yoshihiko Noguchi, and Shuzo Sakata (Bank of Japan), David Strachan (Bank of England), Christopher McCurdy and Dino Kos (Federal Reserve Bank of New York), Thanasak Chantarovas (Bank of Thailand), and Igor Kniazev (Central Bank of the Russian Federation) participated at various times and contributed to the process. Tom Nordman, who headed these missions, put together the section on the development of the exchange system. R. Barry Johnston, Arto Kovanen, and Bernard Laurens also participated and contributed at various stages.
The sections on financial sector, money and capital market development, and instruments of monetary policy are the product of a series of missions, seminars, and workshops that were organized in China and in which, in addition to Hassanali Mehran, Marc Quintyn, and Bernard Laurens, a number of experts from the cooperating central banks participated. They were Ian Clunie (Bank of Canada), Leonard Fernelius (formerly Federal Reserve Bank of Minneapolis), Giorgio Gobbi (Bank of Italy), Jae-Chun Kim (Bank of Korea), Suchada Kirakul (Bank of Thailand), Werner Nimmerrichter (Bundesbank), Irwin Sandberg (formerly Federal Reserve Bank of New York), Rüsdü Saraçoglu (formerly Governor, Central Bank of the Republic of Turkey), Hiroki Tanaka (Bank of Japan), and Abdul Ghani Zamani (Bank Negara Malaysia). Professor Maxwell Fry also conducted seminars on money demand estimates and reserve money programming. Payments, clearing, and settlement systems were the subject of one workshop in which Leonard Fernelius participated. The theme of one mission in which Eung-Jin Kim (Bank of Korea) participated was currency issue and management. Marc Quintyn integrated these sections, as well as the paper as a whole. The statistical work has been coordinated by Bernard Laurens, while tables and charts have been prepared by Kiran Sastry (Research Assistant, MAE). Charmion O’Connor (Administrative Assistant, MAE) prepared the manuscript, and Thomas Walter (External Relations Department) skillfully edited the text and coordinated its production and publication.
Throughout the work of various missions and in the final stage of preparing this paper, Douglas Scott, the IMF Resident Representative in China, worked closely with the staff and contributed greatly to the policy discussions with the authorities. He also extensively commented on all sections of the paper.
The staff of the People’s Bank of China and of the State Administration for Exchange Control cooperated closely with the IMF teams during their work in China. The Chinese officials maintained frank and open discussions, presenting to the IMF staff the policy options for China in the area of financial sector reform. To them, who are too numerous to name here, the special thanks of the authors are due. Our special thanks are also due to Governor Dai Xianglong and Deputy Governor Chen Yuan, who coordinated the work of the missions’ counterpart teams.
The authors are also grateful to their colleagues in several IMF departments who provided useful comments and suggestions on earlier drafts of this paper. They are particularly grateful to their MAE colleagues Ales Bulir, Peter Dattels, Anne-Marie Guide, Kyung Mo Huh, V. Sundararajan, and Peter J. Winglee for their helpful suggestions and insights.
The views expressed in this Occasional Paper, as well as any remaining errors, are the sole responsibility of the authors and do not necessarily reflect the opinions of the Chinese Government, the Executive Directors of the IMF, or any other members of the IMF staff.
Glossary of Abbreviations
Agricultural Bank of China
Bank of China
Bank of Communications
China Foreign Exchange Trade System
China Investment Bank
China International Trust and Investment Corporation
Electronic Interbank System
Foreign Exchange Adjustment Centers (swap centers)
Industrial and Commercial Bank of China
international trust and investment companies
Ministry of Foreign Economic Relations and Trade
nonbank financial institutions
National Electronic Trading System
National Foreign Exchange Adjustment Center
People’s Bank of China
People’s Construction Bank of China
Provisional Securities Settlement System
People’s Insurance Company of China
rural credit cooperatives
State Administration for Exchange Control
Special Economic Zones
Securities Trading Automated Quotations System
trust and investment companies
township and village enterprises
urban credit cooperatives