BEIJING (Reuters) – China will scrap a quota system that limits foreign investment in domestic securities markets when conditions are right, the central bank’s research head said on Friday.

The Renminbi Qualified Foreign Institutional Investor program, which allows financial institutions to use offshore yuan to buy securities in mainland China, will be expanded, said Lu Lei, head of research at the People’s Bank of China.

He did not give any timeframe.

Foreign firms will be encouraged to issue and trade yuan bonds and sell shares in domestic markets, with a stock connection between Shenzhen and Hong Kong coming “at an appropriate time”, Lu said at an economics seminar.

Lu said China would research foreign currency-denominated debt and cross border capital flows, and would set up effective risk management systems.

Curbs on foreign exchange management will be relaxed, and China will look into loosening restrictions on individuals making overseas investments, Lu said.

Lu said China would expand the range of foreign investors allowed to participate in its markets and will further simplify rules for foreign investors.

(Reporting by Shen Yan Writing by Elias Glenn; Editing by Clarence Fernandez)

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