Financial institutions may now offer foreign currency services with special accounts operating at the Shanghai (Pilot) Free Trade Zone, according to a statement by the Shanghai headquarters of the People's Bank of China.

The latest move was seen as an important measure to enable full convertibility of Chinese currency and a test for bolder reforms in the FTZ.

Starting on April 23, financial institutions can offer foreign currency services for trade and foreign direct investment for offshore companies and companies in the FTZ, the statement said.

Companies with the accounts will now be able to manage their yuan and foreign currencies under a unified system, which could facilitate foreign and local exchange conversion, lower conversion costs, and better manage foreign exchange rate risks, according to the statement.

The free trade account policies for Shanghai’s FTZ were first introduced by China’s central bank last June, which allowed five banks to open the account as a preliminary test. Companies registered in the FTZ can use the account for financing, investment and other cross-border transactions.

So far, 17 financial institutions have launched free trade account services and set up 12,466 such accounts with cross-border trade transactions of 140.3 billion yuan ($22.6 billion) and domestic transactions of 174.3 billion yuan.

China's central bank previously eased restrictions on overseas investment by allowing individuals working in the zone to open accounts for overseas investment.

The FTZ in Shanghai’s Pudong District has launched pilot schemes to advance financial reforms. Key programs include easing cross border use of the Chinese yuan, liberalizing interest rates on foreign currency loans, facilitating offshore financing and outbound investment.

Industry insiders said that the free trade account system is expected to be applied in other FTZs in Guangdong, Fujian provinces and Tianjin.

China also released the latest "negative list" where foreign investment is banned or restricted. The list was shortened to 122 items from the original 190 items and is applicable to all the four FTZs.