STEVE INSKEEP, host:
Americans political and business leaders have also been pressuring China to loosen the country's strict controls over its currency. And in at least one way, China has loosened its grip. If you walk into the Bank of China branch in New York or Los Angeles, you can now open a personal savings account, denominated, not in dollars, but in yuan - the Chinese currency, which is also sometimes called the renminbi.
NPR's David Kestenbaum, with our Planet Money Team, explains the significance of that.
DAVID KESTENBAUM: This may not sound like a big deal. But one way, China keeps control over its exchange rate is by tightly controlling its currency, the yuan. China limits the amount of yuan bills you can take in and out of the country. As a foreigner, its been very difficult to actually own yuan. But now, through one of these savings accounts, you can.
Unidentified Woman: Thank you for calling the bank the Bank of China, Chinatown Branch. (Foreign language spoken)
KESTENBAUM: The Bank of China started offering the accounts quietly a few months ago. I called up to request an interview, and a spokesman said no thanks. Eswar Prasad, professor at Cornell, says: what do you expect?
Professor ESWAR PRASAD: Surprise, surprise. Its a little odd. You would think that they're sort of keen to get their message out. This is supposed to be part of the effort to get the renminbi well-known.
KESTENBAUM: But also, as a bank, they should say hey, we've got these savings accounts. You know, come open an account. Right?
Professor PRASAD: Yeah, exactly. And they're going to pay you nothing in interest. But since you're still dying to have these accounts, youre welcome to them.
KESTENBAUM: They pay a little interest, but not much. Prasad says at this point, the accounts are a symbol. Even for people doing business in China, these things wouldnt be very useful, because most transactions between U.S. and Chinese business are done in, yep, the dollar.
Professor PRASAD: It's more like just a joy of holding a little bit of yuan, which for an individual investor, it's very difficult to do otherwise.
KESTENBAUM: These accounts are something investors might be interested in. Ken Rogoff is an economist at Harvard.
Mr. KEN ROGOFF (Economist, Harvard): Most people think that the Chinese currency is cheap. And eventually it's going to go up, a lot. So if you can open a bank account in New York and just buy Chinese currency, you have significant possibility that the yuan will rise over time. It went up three percent last year, three and a half percent. It could go up more, and probably eventually and eventually being over the next 10 or 15 years probably go up 100 percent. I mean some very significant amount.
KESTENBAUM: These savings accounts are the sort of thing China would have been very nervous about in the past. If everyone opens up bank accounts and holds yuan in them, thats an increase in demand for yuan, which would make it worth more against the dollar.
And remember, China wants to keep it down, to keep its goods cheap abroad, to boost its exports. That fear is probably why, the yuan savings accounts, like the currency, have a lot of controls on them. You cant put more than $20,000 in over the course of a year. And for currency traders, yuan isnt even on the radar yet.
Mr. ANDREW SPANTON (Foreign exchange trader): We've been trading today, the Euro, U.S. dollar, the dollar yen, the pound dollar, dollar Swiss, traded euro yen, pound yen, Aussi yen, luna yen, thats the Canadian dollar, luna yen...
KESTENBAUM: This is Andrew Spanton, a foreign exchange trader, also has an online radio show, "Global Markets Radio."
Mr. SPANTON: A pound against the Australian dollar.
KESTENBAUM: Have you ever traded the Chinese currency?
Mr. SPANTON: Never, no desire. No desire at all.
KESTENBAUM: Something like $4 trillion worth of currency trades on these markets every day. Very little of it is yuan.
Mr. SPANTON: It's hard to trade a currency that is manipulated on a day to day basis. It's like you're trading against the house.
KESTENBAUM: So you can think of the savings accounts as like a little coming out party for the yuan. China is saying, one day this will be a regular global currency. One day, we will do what you want, we will stop managing the exchange rate. One day, in fact, the yuan may rival the dollar.
David Kestenbaum, NPR News.
(Soundbite of music)
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.