China has approved six more banks as inter-bank spot foreign exchange market makers, bringing the total number to 21, said sources with the State Administration of Foreign Exchange (SAFE) on Thursday.

The six banks are China Everbright Bank, China Minsheng Banking Corporation, Huaxia Bank, China Development Bank, Sumitomo Mitsui Banking Corporation's Shanghai branch and Deutsche Bank's Shanghai branch.

The move aims to further enliven China's foreign exchange market, by improving liquidity and transaction efficiency, said the sources.

Thirteen of the 21 inter-bank spot foreign exchange market makers are domestic banks and the other eight foreign-funded banks.

Inter-bank spot foreign exchange market makers provide market members with non-stop purchase and sale prices for inter-bank transactions between the yuan and foreign currencies.

China's 261 foreign exchange market members include commercial banks, financial institutions and firms.

To qualify as a market maker, an institution must have been a market member for at least two years and have a capital adequacy ratio (CAR) of eight percent or a capital base of foreign currencies worth 100 million U.S. dollars.

China's foreign exchange market maker system has made the yuan foreign exchange rate mechanism more flexible since it was introduced on Jan. 1, 2006, said the sources.

Source: Xinhua