HAIKOU -- Recently, Sunrise Fuel (Hainan) Co Ltd completed a cross-border transaction settlement with an overseas client through its EF account in less than two hours in South China's Hainan province. It is a speed that would have been unimaginable in the past.

"With the EF account, we can handle cross-border settlements entirely online through a one-stop process," said Chen Qiuyi, financial director of Sunrise Fuel (Hainan) Co Ltd.

There is no need to verify each payment manually. Once a payment instruction is submitted online, the funds are transferred quickly and securely to the overseas recipient, Chen added.

In contrast, domestic companies making US dollar payments to overseas partners had to provide extensive supporting materials, including upstream and downstream contracts and invoices, in the past. The process usually took one to two working days.

The EF account's full name is Electronic Fence Account. It is officially known as the multi-functional free trade account. On April 3, 2024, the Hainan Branch of the People's Bank of China established a cross-border capital flow management framework and issued corresponding management measures. Later, the EF account system officially went live on May 6, 2024.

Since its launch, the EF account has been hailed by the financial industry as a "highway" for cross-border capital flows. It is a key infrastructure that facilitates the free flow of capital across borders in the Hainan Free Trade Port (FTP). It has quickly become popular among enterprises engaged in international trade and investment.

Industry experts explained that the main advantage of the EF account is the integration of domestic and foreign currency accounts. It uses RMB as its main account currency. It allows multiple foreign currencies (such as the US dollar and the euro) to be linked as sub-accounts under the same account number, eliminating the need for companies to open multiple accounts for different currencies. This unified structure greatly improves operational efficiency.

According to Ye Hong, general manager of the Transaction Banking Department at the Bank of China Hainan Branch, the EF account supports multiple freely convertible currencies, including the US dollar, euro, and yen, and allows settlements using offshore exchange rates. Enterprises can flexibly choose between onshore and offshore rates based on their business needs and market conditions.

The creation of the EF account marks a major institutional innovation toward realizing Hainan FTP's goal of free and convenient cross-border capital flows. The Hainan FTP will officially launch island-wide special customs operations on Dec 18 this year, marking a landmark move by China to promote the development of an open world economy.

Wang Fanghong, vice-chairman of the Hainan FTP Financial Society, noted that the EF account represents a crucial step in advancing Hainan's high-level financial opening-up.

It will continue to provide strong financial support for the port's deeper opening-up after the island-wide special customs operations and meet the increasingly diverse financial needs of enterprises engaged in global trade and investment, Wang said.

Currently, the EF account's application scenarios continue to expand, covering a wide range of areas including cross-border trade settlement, spot and forward foreign exchange transactions, foreign exchange trading, loans, trade financing, offshore lending, foreign debt management, and foreign investment. As of the end of September this year, more than 600 EF accounts had been opened across the island, handling a transaction volume of over 200 billion yuan ($28.24 billion) with 76 countries and regions.