The Shanghai branch of People' s Bank of China, China's central bank, recently rediscounted a commercial bill in Chinese currency which had been discounted by a foreign-funded bank.

The bill, whose par value hits 1.14 million yuan (about 130,000 US dollars), had been discounted by the Shanghai branch of Sanwa Bank.

It is the first time China's central bank branch has offered such a rediscount.

This means that those foreign-funded banks which deal in Renminbi-based business (business based on Chinese currency) will be able to get more Renminbi capital, according to officials with the central bank.

The act is a breakthrough in the use of the rediscount currency policy of China's central bank, explained the officials, and will promote the opening of China's banking.

In late 1996, foreign-funded banks in China were given the go- ahead to deal in Renminbi-based business. Since then, the central bank has made some favorable policies to expand the scope of foreign banks in such business activities.

According to the statistics provided by the central bank's Shanghai branch, by the end of September 1999, the total assets of 19 foreign-funded banks which deal in Renminbi-based business in Shanghai hit 4.4 billion yuan (532 million US dollars), and their debt is 3.6 billion yuan (435 million US dollars).

Financial experts said that by accepting foreign banks' requests for rediscounting, the central bank has broadened their capital resources and promoted the development of their Renminbi- based business. (Xinhua)