China will launch a pilot system to monitor cross-border capital flow, in a move seen as a new step toward yuan convertibility.
The State Administration of Foreign Exchange said on Monday it would start a pilot program in Liaoning, Zhejiang (excluding Ningbo) and Shaanxi provinces, and Dalian city in the northeast, to update the data collection system regarding capital transactions.
The program will become effective on Jan 14 and will cover all capital account business processed by foreign exchange regulators, and by banks for enterprises and individuals in the four regions.
"The new system is in accordance with the 12th Five-Year Plan (2011-15) to gradually realize yuan convertibility," the administration said.
It said the system would also help to facilitate capital account transactions and better fend off risks by strengthening monitoring over cross-border capital flow.
Banks and authorities will evaluate the pilot program in the last two weeks of April.
"Such a system is a necessary step to prepare for the opening up of the capital accounts, a goal that was stated clearly in the current five-year plan," said Zhao Xijun, deputy dean of the school of finance at Renmin University of China.
The new system also requires banks to submit certain data that had previously not been collected.
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