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Loose money woes: China gears to create ‘Special Currency Test Zone’

China has planned to create a “Special Currency Test Zone” in Shenzhen to counter loose money woes.

With the introduction of this measure, Hong Kong banks would now be able to lend renminbi directly to companies in Qianhai Bay – a new economic zone on a peninsula across the water from Hong Kong.”

Over the last two years, Chinese companies have been allowed to settle most of their international trade in renminbi. This has provided a channel for the currency to flow abroad in large volumes for the first time.”

It is expected that the new rules would help in eliminating many controls; making it possible for Hong Kong banks to directly lend to Chinese clients in Shenzhen.

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