How China loosened brakes on currency

Today earmarks the fifth anniversary of China's foreign exchange reform. Several breakthroughs have been made in the past five years. The following is a recap of the major events tracking the yuan's liberalization:

-- July 21, 2005

China dropped the yuan's decade-long peg to the US dollar, shifting to a basket of currencies of major trading partners, including the euro and the Japanese yen. The yuan appreciated 2.1 percent.

-- September 23, 2005

The People's Bank of China doubled the floating band of the yuan against non-US dollar currencies to 3 percent.

-- January 3, 2006

The central bank introduced the over-the-counter exchange mechanism.

-- May 15, 2006

The yuan broke the historic level of 8 against the US dollar.

-- February 1, 2007

Individuals in China were allowed to increase their yearly foreign-exchange quota to 50,000 yuan from 20,000 yuan.

-- May 18, 2007

The central bank increased the yuan's trading band against the greenback to 0.5 percent from 0.3 percent.

-- August 2007

The State Administration of Foreign Exchange canceled the quota on current-account for accounts.

-- September 2007

China set up its sovereign wealth fund, China Investment Corp, to expand investment channels for China's mounting forex reserves.

-- April 10, 2008

The yuan broke the historic level of 7 against the US dollar.

-- July 6, 2009

China started a trial program to settle cross-border trades in yuan in Shanghai and four southern Guangdong Province cities.

-- June 19, 2010

China pledged to increase the flexibility of China's exchange-rate regime and further improve the exchange rate mechanism but ruled out a one-off appreciation.

The stance is deemed to be a key signal of change in the forex regime, away from its de facto fixed peg to the dollar. The yuan then resumed its appreciation against the US dollar.

-- June 22, 2010

China expanded its trial program on yuan-backed cross-border trade settlement to 20 provinces and municipalities from five cities.

-- July 19, 2010

The Hong Kong Monetary Authority and People's Bank of China signed a supplementary memorandum of yuan cooperation to scrap restrictions on banks in Hong Kong offering yuan services for financial institutions.