The Chinese central bank, the People’s Bank of China (PBOC), has granted Citibank approval to engage in foreign currency dealings with Chinese citizens. It is the first license to be granted since the PBOC announced in December last year that it would allow foreign banks to transact foreign currency business with Chinese firms and individuals. From Thursday 21 March Citibank will be free to take foreign
currency deposits from Chinese customers in Shanghai. Until now, foreign banks have been restricted to dealing with foreigners only. They are still forbidden to compete with Chinese banks for local currency business. However, there are signs that the Chinese authorities are taking amore liberal attitude towards yuan (or Reminbi) business of foreign banks. Under the WTO agreement with China, the government is supposed to allow
full market access within five years.