New controls on banks

China's regulators announced new restrictions on banks borrowing overseas. The measures target sources of hot money coming into China, aiming to ease pressure on the renminbi. Under new guidelines, each bank will be allotted a quota, which can be appealed once a year. Institutions now have to apply to the State Administration of Foreign Exchange (SAFE) for approval on short-term loans and to the National Development Reform Commission (NDRC) for loans over a year. Much of the borrowing has been done by speculators piling up yuan in the hope that the People's Bank of China will revalue the currency. Last year, foreign currency deposits declined in Shanghai while foreign currency loans skyrocketed 50%, according to a report in the South China Morning Post.