The central bank has established a department tasked with formulating and overseeing the country’s exchange rate policy, stoking speculation that the mainland will make its currency more flexible, the South China Morning Post reported. The new department will be responsible for developing an offshore yuan market in tandem with the yuan’s internationalization. Sources told the paper that Hong Kong would be the top choice for the yuan’s offshore market. The exchange rate department will submit policy proposals to other government agencies while monitoring the foreign exchange market and international capital flows. Analysts were cited as saying that the currency’s exchange rate would remain controlled in the short term, but that the establishment of the new department demonstrated China’s desire to develop the yuan into a key global currency.