China’s c-bank puts on hold Forex operations of some foreign banks

The People’s Bank of China (PBOC) has issued suspension notices to at least three foreign banks regarding their Forex businesses, in a move underlining the stringent controls of the financial sector in China.

According to a Reuters report, citing anonymous sources with knowledge of the matter, China’s central bank has suspended the banks from conducting Forex operations until the end of March 2016. The sources said that the list of services affected includes liquidation of spot positions for clients and some other services related to cross-border, onshore and offshore businesses.

The People’s Bank of China (PBOC) provided no reason for the suspension, with the sources speculating that such a reason could be the large scale of the banks’ cross-border Forex businesses.

About three months ago the PBOC ordered banks to examine their clients’ Forex transactions to prevent illicit cross-border currency arbitrage.

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