1) Core functions
The China Foreign Exchange Trade System (CFETS), also known as the National
Interbank Funding Center (the Center), is a sub-institution of the People's
Bank of China (PBC). Its main functions include: providing systems for
foreign exchange (FX) trading, RMB lending and bond trading; organizing
interbank FX trading, RMB lending and bond trading; handling settlement
and clearing of FX trading; prompting the clearing of RMB lending and
bond trading; providing an online commercial paper (CP) quotation system;
providing information on the FX, bond and money markets; and engaging
in other businesses authorized by the PBC.
2) Organizational framework
With its head office in Shanghai and its back-up center in Beijing, CFETS
has 18 sub-centers in Guangzhou, Shenzhen, Tianjin, Jinan, Dalian, Nanjing,
Xiamen, Qingdao, Wuhan, Chongqing, Chengdu, Zhuhai, Shantou, Fuzhou, Ningbo,
Xi'an, Shenyang and Haikou.
3) Development
As an outcome of FX system reforms, CFETS was founded in April 1994.
In accordance with the market development strategies of the PBC and the
State Administration of Foreign Exchange (SAFE), under the guidelines
of "multiple technological means and trading patterns to meet market
demands of various levels", CFETS introduced the FX trading system
in April 1994, the RMB credit lending system in January 1996, interbank
bond trading in June 1997, the trading information system in September
1999 and the website http://www.chinamoney.com.cn in June 2000. RMB voice
brokering began in July 2001 and the monthly periodical CHINAMONEY went
into publication in October 2001. In the same period, FX deposit brokering
debuted in June 2002, and www.chinacp.com.cn was launched and the paper
quotation system was introduced in June 2003. In May 2005, interbank foreign
currency pairs trading was introduced, and interbank bond forward trading
was introduced in June. In August 2005, RMB/FX forward trading was introduced.
Through the modes of electronic trading and voice brokering, CFETS provides
the interbank FX market, RMB lending, bond market and paper market with
services of trading, clearing, information and surveillance. CFETS has
played a significant role in safeguarding RMB exchange rate stability,
transmitting central bank monetary policies, serving financial institutions
and supervising market operations.
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