MNI POLICY: Ex-PBOC Chief Sees Wider Yuan Flotation In Future

By Iris Ouyang

     HAINAN(MNI) - The yuan's trading range will become wider and more

determined by the market in the future, the former governor of the People's Bank

of China said Friday, without giving any timeline.

     "I think the FX system for the renminbi will be more market-based and more

in line with the way that's recognized internationally," Zhou Xiaochuan told a

small group of reporters at the annual Boao Forum for Asia. "That way it can

more effectively reflect market supply and demand."

     A flexible currency would benefit the economy, and make allocation of

market resources more efficient, Zhou said, adding that China will maintain a

floating exchange rate system based on adequate management and yuan stability.

     China can also further liberalise its corporate bond market, according to

Zhou. He said that he agreed with current PBOC Governor Yi Gang, who has said

such a move will promote competition. "It won't harm our market or financial

institutions."

     Zhou also called for a greater role for foreign financial institutions.

     "When we expand market access, we at the same time need to allow these

financial institutions' to conduct a broader range of business to some extent,"

he said.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

[TOPICS: M$A$$$,M$Q$$$,MT$$$$]