China has continued to make strides in expanding the role of the renminbi as a global currency and enhancing the convertibility of the nation's currency on the capital account. This has created benefits on a number of fronts but it has also made the boundary between rules governing fund movements in different currencies harder to distinguish. Nonetheless,there are still significant differences in the regulations for domestic and foreign currencies,and this is leading to regulatory arbitrage on cross-border capital movements and more volatility in fund flows. It is imperative that we study ways to narrow the regulatory differences and build a more integrated supervisory system that can prevent risk.

Supervision Policies for Domestic and Foreign Currencies

In foreign exchange settlements from overseas,namely when the foreign exchange is settled at a foreign bank and then transferred back  into the nation,or foreign exchange transfer to a domestic bank then settled in the foreign banks and again transfer back to the nation,all the entry currency should be in renminbi.

According to the principles of statistics of the international balance of payments,the currency for declaration should be in the currency of the entry place as the standard. The former type of declaration currency should be in renminbi,and the latter should be the currency of the first entry place.