The central government has decided to widen a pilot project for Renminbi inward convertibility from the Qianhai special zone to the rest of Shenzhen. On its own, this development is not earth-shattering, as any bank in the city with a Qianhai branch has been able to easily convert foreign currencies to RMB for more than a year now. But the reason given for the change ought to make Hong Kong bankers nervous. It is for the country to “advance liberalization of the capital account”.
Pilot firms will not need to provide documentation about each foreign exchange transaction regarding their capital accounts and, instead, banks may do random inspections, the State Administration of Foreign Exchange announced on its website. Capital account items in this context could, for example, involve funds secured by going public overseas or debt.