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E-mail China Daily, November 12, 2012
"Shadow banking is inevitable when banks are developing their business," Zhou said. "But there are fewer problems here than the shadow banking sector in some developed countries that have been hit by the global financial crisis."
In an article for China Daily published in October, Xiao Gang, chairman of Bank of China, said that shadow banking was like a Ponzi scheme.
A Ponzi scheme is a fraudulent investment operation that pays returns to investors from their own money or the money paid by subsequent investors.
Chinese banks are also priming themselves to steadily expand international business as the yuan becomes more of a global currency.
Industrial and Commercial Bank of China plans to increase the number of international branches as it focuses on mergers and acquisitions to become a multinational group, Jiang Jianqing, the bank's chairman said. The lender is the world's largest in terms of market value.
"The growth in the overseas market is even faster than domestic business," Jiang said. The bank, he said, has earned $864 million from its overseas operations in the first half of this year.
As Chinese banks expand overseas, the central bank is pushing direct transactions between the yuan and other currencies to facilitate cross-border trade and investment.
The Reserve Bank of Australia is in currency talks with the central bank to start direct trade between the Australia dollar and the yuan, "which is a good thing and the two central banks will fully support it", Zhou said.
According to the Society for Worldwide Interbank Financial Telecommunication, the international payment platform, the number of countries and regions processing yuan payments grew to 91 in June from 65 a year earlier, while institutions processing such payments increased to 983 from 617 during the same period.
Hong Kong contributed around 80 percent of yuan payments in the first eight months of 2012.
An HSBC survey showed that 77 percent of Chinese companies expected one-third of all Chinese trade to be conducted in yuan by 2015, and 30 percent plan to use the currency for investment-related purposes in the next 12 months.
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