Q: Sources report that the SAFE has made vigorous efforts to explore ways to carry out innovative utilization of foreign exchange reserves, and an office has been assigned to deal with the related tasks. Could you please brief us on the progress in this work?

A: During recent years, China’s economy has been forging ahead steadily and national economic strength has witnessed significant growth. The capabilities of enterprises have also been on a steady rise and, on the whole, economic operations are now better off. Meanwhile, global economic integration has been further deepened and economic exchanges and ties have constantly been strengthened. The long-term development of the economy and society requires an acceleration in the transformation of economic development patterns and implementation of the “going-global” strategy, so as to further open up to the outside world and better capitalize on markets and resources both at home and abroad.  

The People’s Bank of China and the SAFE have attached great importance to the role of the foreign exchange market in sustaining national economic and social development. In recent years, in addition to doing a good job in regulating monetary policy and foreign exchange administration, we have constantly made innovations in the utilization of foreign exchange reserves to support the economic development of the service entities of financial institutions and the “going-global” strategy. In addition, we have established the SAFE Co-Financing Office within the foreign exchange reserves operations and administration organization to take charge of the work of making innovations in the utilization of foreign exchange reserves. Innovation in the utilization of foreign exchange reserves is an integral part of foreign exchange reserve operations and administration. The relevant operations are all conducted in compliance with market principles and conditions. Furthermore, all arrangements are in compliance with general industry practices, and we respect market choice and maintenance and promotion of fair competition in the market.

Since the launch of the co-financing business, we have provided a sound foundation and financing environment for China’s financial institutions and players in the foreign exchange market by means of regulating fund supply and demand in the foreign exchange market. We have thus promoted national economic and social development, expanded the scope and fields of investment of foreign exchange reserves, and further facilitated the diversified operations and administration of the reserves. In addition, by prioritizing risk prevention we have maintained and increased the value of our foreign exchange reserves.