The system will enable the transfer to be settled on the following day.

"All domestic and foreign banks in Shanghai can take advantage of this system," said a deputy director of the PBOC Shanghai Branch's Division for Foreign Funds, whose surname was Shi.

She said this cross-provincial settlement system was needed because foreign banks in Shanghai had the right to conduct business in foreign currency in Shanghai and the provinces of Jiangsu and Zhejiang.

"This cross-provincial settlement system for foreign funds will be a great convenience," she said.

In the past, the cross-provincial settlement of foreign funds was usually done through the settlement centers of Chinese or overseas commercial banks.

"Different commercial banks had different operational methods, which made it difficult to predict the time needed for the transaction," she said. "The charges of commercial banks are also high."

Sometimes the money would not reach the destination accounts for five to seven days, according to Shi.

The foreign currency transactions in domestic and foreign banks in Shanghai has increased in value to over US$6.5 billion, according to the PBOC Shanghai Branch.

Increasing numbers of multinational companies, most of which have management offices in Shanghai and factories or branches in neighboring cities, urgently needed a more convenient foreign currency settlement system to help them transfer foreign funds from one place to another within China.

Therefore, the Shanghai branch has decided to run a trial of the system with the Nanjing Branch to transfer foreign currency between Shanghai and Jiangsu Province. For the time being, the PBOC's Shanghai Branch will not charge for the settlement, while their overseas partner will charge US$17 for each settlement.

The settlement of foreign funds between Shanghai and Zhejiang Province will also begin soon.

(China Daily 11/01/2000)