HAIKOU, June 16. /TASS/. The Bank of China launched a first full-fledged system of bilateral cross-border cash-pooling for a group of multinational companies belonging to the Changfeng Energy Group in order to manage cross-border capital from the center, reported the Hainan Daily.
The cash-pooling system is used to consolidate the funds of a group of companies in one bank account and also allows to control multiple accounts simultaneously. The system of this kind was first launched in Hainan's pilot free trade zone.
Changfeng Energy Group specializes in investment, development and operation of energy projects. The major foreign company mainly invests in gas industry. As cross-border trade on Hainan grows, difficulties arise in the movement of capital between the Chinese and foreign subsidiaries within this multinational group of companies. The first cross-border cash-pooling launched in yuan, the newspaper writes, became an example of innovation in the financial sector based on the free trade account on the island. This system will boost the development of the business of multinational enterprises in the province's free trade port.
A free trade account creates the necessary basic conditions for cash-pooling. Not only enterprises established in the free trade port will be able to open accounts, the newspaper writes, but also companies registered abroad. "This means that foreign parent companies and subsidiaries of transnational groups can open accounts in Hainan's free trade port, which will create a global capital management center in the free trade port of Hainan," the news outlet quotes a representative of the Bank of China's Hainan office.
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