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News related to IBS business and Chinese financial industry

IBS Lithuania was granted an Electronic Money Institution License.

The Board of the Bank of Lithuania has issued a licence of an electronic money institution to UAB „IBS Lithuania“. Holding it, the company can issue and redeem electronic money, provide payment services across the European Union. When submitting a request for the licence, the company informed the Bank of Lithuania that it was planning to create a payment platform on which payment transactions between European Union and Chinese entities would be executed. This payment institution also plans to become a participant in the Bank of Lithuania’s payment system SEPA-MMS and execute payment transactions within this system. UAB „IBS Lithuania“ is a subsidiary undertaking of the company International Business Settlement Holdings Limited, which is listed on Hong Kong’s Stock Exchange. The formation of a favourable regulatory and supervisory environment for the provision of financial services activity and promotion of financial sector innovations are one of the strategic directions for Bank of Lithuania activities in 2017–2020. Together with other domestic institutions, the Bank of Lithuania aims at Lithuania becoming a FinTech centre in the Nordic-Baltic Eight (NB8).

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China has injected hundreds of billions yuan into the financial system

PBOC has injected hundreds of billions yuan into its financial system after small lenders failed to make payments in the interbank system. Failure to make debt payments by some small commercial banks and three traders, which resulted in capital injection by the PBOC. This has resulted in the benchmark money market rates, climbing to the highest point since the beginning of 2015. Consequntly, by letting the borrowing costs rise, PBOC have sent a message to lenders using extensive leverage, to discourage widespread borrowing.

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China’s central bank thinks digital currency can do one thing cash can’t

China’s central bank, the People’s Bank of China (PBoC), has been working to develop its own digital currency. Having recently completed a trial run of its cryptocurrency based on blockchain technology, the PBoC is moving closer to becoming one of the first central banks to issue digital money. It appears to be the first time that the Chinese central bank has directly linked issuing digital currency to its monetary policies, and in particular to negative interest rates. Negative rates, which charge banks to hold money, have in recent years been used by Japan, Sweden, Switzerland, and Denmark to boost growth and raise inflation, to varying degrees (paywall) of success. China, on the other hand, is in effect increasing rates as its economy is still revving up.

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China’s largest banks make money on the debt war

While smaller lenders grapple with soaring money-market rates -- some are said to have defaulted amid the tight liquidity -- their larger counterparts are poised for a windfall. Bigger banks are benefiting from higher borrowing costs given their status as net lenders in the interbank market, a situation that has Citigroup Inc. to Morgan Stanley favoring their shares. Large bank stocks have already returned double that of their smaller brethren so far this year. the increase in money market rates by PBOC has sent a message to small-cap banks to control their borrowing, which created and opportunity for large banks to capitalize on it.

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Yuan to steadily become convertible on capital account: central bank

The yuan's globalization is a long-term strategy that demands consistent and steady efforts, Yi Gang, the deputy central bank governor, told participants at an insider meeting. China's economy is still proceeding on a stable track, he said, adding the market forces that drive the yuan's global use remain. Efforts should be made to enhance the yuan's role in investment, reserves and financial transactions. When pushing for the currency's use in cross-border transactions, steady efforts should be made to make it convertible on the capital account, he said. The central bank also underlined the importance of enhancing risk prevention and vowed to step up market supervision. China has been pushing for the yuan's global use, as the world's largest trading nation looks to lower transaction costs in international trade, which is mostly settled in US dollars at present. Making the yuan convertible on the capital account is essential to reaching this target. China currently makes its currency fully convertible on the current account for trade purposes, but is yet to fully open its capital account for investment purposes.

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Fintech seen bridging financing gap for the 'under-banked'

Financial technology-or fintech-could contribute to the real economy by bridging the financing gap for "under-banked" individuals and small and medium-sized enterprises lacking a credit history, industry experts said on Thursday during the Boao Forum for Asia 2017. The four-day BFA Annual Conference 2017, themed "Globalization & Free Trade: The Asian Perspectives", is being held from March 23 to 26 in Boao, Hainan province. Services built around technology breakthroughs-from big data, cloud computing to artificial intelligence-could build solutions specific to particular finance needs and bring banking to those who need it the most and the underserved, the experts said on Thursday. Fintech, defined as the use of technology and innovative business models in financial services, is catalyzing changes in finance that have extended the sector's geographic reach and the availability of financial products, said Ma Weihua, former head of China Merchants Bank.

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EU bank eyes Chinese green lending

THE European Investment Bank plans to lend 500 million euros (US$539.1 million) to Chinese green projects in 2017, a senior official of the bank said yesterday. The bank of the European Union is also working with China’s central bank on a standard to govern the issuance of green bonds as both push for investment related to climate change. “We have a strong pipeline of projects this year, with interest in forestry and energy efficiency. We are also looking at projects in urban transport,” EIB Vice President Jonathan Taylor said at a media briefing in Shanghai. He added that the EIB will lend another 500 million euros to environment and climate-related projects in China in 2018. Last year, EIB lent 298 million euros to eight Chinese projects, ranging from forestry, biomass to energy efficiency. The bank has provided 16.7 billion euros of loans to climate-related projects since 2007, according to Taylor. The EIB and the People’s Bank of China are also working on a framework for a common standard on definition, auditing procedure and measurement of investment outcome for the issuance of green bonds to help them turn into a global asset class and promote capital flows in both directions, Taylor said. The EIB and PBOC will publish findings of the discussions in a white paper later this year, Taylor said. China is pushing to fund green projects, which have positive environmental or climate benefits, to support its agenda of industrial reform and its anti-pollution fight. Last year, 29 Chinese firms and financial bodies raised over 201 billion yuan (US$29 billion) in green bonds, including medium-term notes and asset-backed securities, according to a report by China Central Depository & Clearing Co.

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