Chinese authorities put pressure on brokers
Times are tough for brokerage firms in China. The authorities begin to increase the pressure on them. Earlier, the media space and financial markets have already come under pressure.
As reported Reuters, the largest brokerage companies that have always published forecasts for the yuan are now forced to change their policies. They are engaged in giving out lengthy reasoning, without clear predictions. That is, they are simply afraid of sanctions from the Central Bank, as well as the State Administration of Foreign Exchange (SAFE).
Reuters analysts conducted a study for months of the actions of brokers, and found that there are no specific forecasts for the yuan. According to representatives of brokerage companies, this practice began in early summer. The reason is that the People’s Bank of China introduced restrictions on the publication of such information.
Now traders do not want to discuss this topic at all, because they are afraid of negative consequences from the regulator. Halyk Bank insistently asked not to publish specific forecasts for the yuan exchange rate.
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And when the People’s Bank of China (PBOC) asks, it actually means that their requests must be fulfilled without unnecessary discussion and resistance. Because the consequences of refusal will be very negative for those who do not want to listen to the NBK. After such bans, forecasts for the yuan exchange rate are published only by foreign banking structures.
Recall that, over the past year, the price of the yuan increased by 6 percent, as there was a significant inflow of foreign currency from export operations. Now the reserves of the Central Bank of the People’s Republic of China are 3.15 trillion in dollar terms. The yuan accounts for only 2.19% of payments around the world, which is 18 times less than the dollar and the euro.
There is nothing surprising in such actions of the authorities. Since officials in the PRC are trying to control absolutely all spheres of social life, it was to be expected that the same will be done with respect to financial companies. The policy of the Communist Party of China is clear and understandable – everything must be under control, and no deviations are allowed. Brokerage companies are now obliged to follow this policy.
In the near future, the Chinese authorities will increase pressure and supervision over all spheres of society. In a few months, the country will host the 24th Winter Olympics 2022. This event is also important in that it will become the first major test of the use of the digital yuan and a kind of presentation at the international level of the possibilities of the new CBDC. It is important for China that the impression of a large-scale economic project is the most positive. Therefore, all regulatory, power and political methods will contribute to the promotion of the digital yuan in the world community.