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The planned Frankfurt representative office of the central People's Bank of China (PBOC) will be similar, in size at least, to its offices elsewhere, a central bank official said yesterday.
"The number of staff will be similar, too - less than 10," said the official who asked not to be named.
PBOC Governor Dai Xianglong said on Monday that the bank plans to set up its fourth overseas representative office in the German city, where the European Central Bank is headquartered.
But it is still unclear whether the new office, already approved by the State Council, will also be responsible for managing part of China's US$212 billion in foreign exchange reserves, as is done by its peers in New York, Tokyo and London.
The official said: "The representative office will be responsible for gathering information on the macroeconomic situation there and strengthening ties with the European Central Bank (ECB) and other central banks."
The date of its kick-off is uncertain as yet, depending as it does on "our preparations and the approval procedures on the other side," the official said.
He indicated earlier reports that the ECB is also planning a permanent office in Beijing were hardly true. "I haven't heard about it," he said.
Analysts say the move is a reflection of Frankfurt's growing financial significance following the EU's successful changeover to euro and would assist China's central bankers in formulating new foreign exchange reserve policies.
"The share of euro (in China's forex reserves) is set to increase, so policymakers need to understand the ECB's decision-making system and the way the exchange rate of the euro changes," said Zong Liang, a senior researcher with the Institute of International Finance under the Bank of China.
"Moving closer to the market certainly helps information gathering and proper decision-making in restructuring foreign exchange reserves," Zong said.
China's economists largely support increasing euro holdings to dilute the dependence on US dollars and Japanese yen in its foreign exchange reserves.
Deputy PBOC Governor Guo Shuqing said at the end of last year that prior to the introduction of euro banknotes and coins, China was already stocking euro.
In a Monday meeting with visiting ECB President Wim Duisenberg, Dai reassured his European counterpart of support for the stability of the euro exchange rate and vowed to promote trade between China and the European Union.
(China Daily February 28, 2002)
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