The Bank of Lithuania has been granted a quota for investment in China
The Bank of Lithuania, the first among the members of the European System of Central Banks, has been granted the status of Qualified Foreign Institutional Investor in China. In addition, our country’s central bank has been granted a quota for direct investment in China’s securities.
“This is an important step in implementing the last year updated Bank of Lithuania financial assets’ management policy that will provide additional possibilities for investing Lithuania’s foreign reserve assets and risk diversification,” says Mindaugas Vaičiulis, Director of the Banking Service of the Bank of Lithuania.
The Bank of Lithuania has received an official confirmation that China’s State Administration of Foreign Exchange had granted to the Bank of Lithuania a USD 100 million quota for direct investment in China’s capital market.
According to M. Vaičiulis, in order for the Bank of Lithuania to be able to start directly investing in China’s — the second world economy’s by size — capital market, there remains a last step — receive permission from this country’s central bank.
The Bank of Lithuania and China Securities Regulatory Commission have already signed a Memorandum of Cooperation in the area of securities supervision. As indicated in the Memorandum, its purpose is to promote investor protection and integrity of the securities, futures and other related investment products markets by providing a framework for cooperation, including channels of communication, increasing mutual understanding and exchange of supervisory and technical information. This Memorandum opens the way for all financial institutions in our country to seek the status of qualified foreign investor, which is necessary to be able to invest in the increasingly opening China’s financial market.
In response to the recent developments of the European and global economy and of financial markets, as well as having taken into account the recommendations of the World Bank, last autumn the Bank of Lithuania updated its financial assets management policy. The policy provides that Lithuania’s foreign reserve assets are to be managed based on the principles of liquidity and security that are priority principles vis-à-vis the principle of profitability. The policy changes provide conditions for investing Lithuania’s foreign reserve assets more flexibly and, in the long run, more profitably.