Chinese authorities are considering setting up a non-bank money exchange outlet in the city, as China pushes for free conversion of renminbi into foreign currencies, a government source said yesterday.

Once approved, the company will be the first in the country to provide foreign currency exchange services, which are currently confined to Chinese commercial lenders.

According to a report by the China Securities Journal last weekend, the first money exchange company is set to open in early February in the city's Pudong New Area.

"The stakeholder of the soon-to-be-established conversion company is a prestigious State-owned enterprise in Shanghai, with registered capital of 10 million yuan," said the newspaper, quoting an unidentified "authoritative source".

"The money exchange company would keep a large amount of foreign currencies on hand, and customers won't have difficulties if they need larger sums of foreign currencies as they do now in commercial banks," the source was quoted as saying.

A Pudong government official told China Daily yesterday that the nation's authorities have been preparing to set up the company for months. "It's regarded as an important innovation in the financial sector," he said.

Initially, authorities wanted to build the company as a joint venture, the source said, adding that the decision was not yet concrete.

"The central bank has yet to approve the company set-up," he said.

The domestic-listed Lujiazui Finance and Trade Zone Development Co Ltd is rumored to hold a majority stake in the firm. Its board secretary Bi Hailin, however, said yesterday she was not aware of the issue.

The report said the company would offer two-way conversion services, while the renminbi is exchangeable with the US dollar, Japanese yen, euro, Australian dollar, Hong Kong dollar, Macao pataca, Canadian dollar and Swiss franc.

Foreigners would also be able to change money at the outlet, avoiding the long queues and language barriers of domestic banks.

Money exchange facilities are currently available at major airports, hotels and department stores for those holding foreign exchange bills.

In addition to providing easier access to money exchange, the company would also help eliminate gangs illegally profiting from the sale of foreign currencies, the report quoted the source as saying.

The company has also hired veterans familiar with foreign exchange transactions from financial institutions such as Bank of China.

In mid-January, the People's Bank of China, the country's central bank, announced that China's foreign exchange reserve had reached $1.0663 trillion by the end of 2006, a surge of 30.22 percent on the previous year.

The State Administration of Foreign Exchange ruled that, from February, individuals could purchase as much as $50,000 in foreign currency per person a year, rising from the current $20,000.

Source: China Daily/AFP