DEFINITION of China's State Administration Of Foreign Exchange (SAFE)
China's State Administration of Foreign Exchange (SAFE), is China's foreign exchange regulatory agency, which functions as a bureau under the People's Republic of China.
BREAKING DOWN China's State Administration Of Foreign Exchange (SAFE)
The State Administration of Foreign Exchange's (SAFE) primary responsibilities include drafting policies and regulations related to foreign reserves and foreign exchanges, supervising and inspecting forex transactions, and managing China's forex, gold reserves and foreign currency assets. The significance of an adjustment in the renminbi's value to the global economy, along with China's huge forex reserves, has made SAFE an increasingly important player in international forex and financial markets.
Functions of SAFE
SAFE's has a few major functions. Its mandate includes the study and implementation of policy measures for the gradual advancement of the convertibility of the renminbi (CNY), China's official currency.
It also includes drafting relevant laws, regulations and departmental rules on foreign exchange administration, and overseeing the statistics and monitoring the balance of payments and the external credit and debt, releasing relevant information according to regulations. This according to the SAFE website.
SAFE operated as an independent entity until 1998, when the Chinese government brought it under the control of the People's Bank of China (PBOC). The rationale for this move was to strengthen the PBOC as a central bank.