Gold exchanges in China outside of two in Shanghai are to be banned, authorities said in a statement released on Tuesday. Gold exchanges have mushroomed across China, from the northern port city of Tianjin to Guangxi bordering Vietnam, as spot prices in the precious metal have soared to record highs and speculation has boomed.
"No local authority, institution or individual is allowed to set up gold exchanges," said the notice dated December 20 and jointly issued by the People's Bank of China, the Ministry of Public Security and other regulators.
The notice - published on the central bank website (www.pbc.gov.cn) - said the Shanghai Gold Exchange and the Shanghai Futures Exchange are enough to meet domestic investor demand for spot gold and futures trading. Existing exchanges or "platforms" were told to stop offering new services.
The PBOC cited lax management, irregular activities and evidence of illegality which were causing risks to emerge, as the reasons for taking the decision.
The central bank said it would lead a team to clear up the mess - gold exchanges will be altered or closed, banks will stop providing clearing services to them; and some people will be put under police investigation, PBOC said. An official at the Beijing Gold Exchange Centre, who declined to be identified, told Reuters over the phone that the exchange has not received any detailed instructions.
"But the talk of a crackdown has been going on for a while," he said. "Of course, this affects our business.