The plan was likely to be discussed and announced at a meeting of governors of provincial central bank branches in Beijing this month, the sources said.

The regional branches would be based in the cities of Shenyang, Tianjin, Jinan, Nanjing, Shanghai, Guangzhou, Wuhan, Chengdu and Xi'an, they said.

China has already announced it plans to abolish its provincial level central bank branches and set up a regional network along the lines of the US Federal Reserve.

However, Beijing has not officially revealed how many provincial branches would be created.

The radical reform is being pushed through by central bank governor Dai Xianglong, a close ally of Chinese premier Zhu Rongji, who is in overall charge of the economy.

Its aim is to strengthen supervision by the central bank over China's chaotic financialsystem, a move spurred by the Asian financial crisis.

Provincial central bank branches are now subject to enormous political pressure from powerful provincial leaders, who are able to thwart central policy in areas such as lending and setting interest rates.

The sources said existing provincial branches would be turned into offices of the regional branches, and the fate of their staff would be determined at the Beijing meeting.

Municipal branches of the People's Bank of China would continue to exist in their present form.

A central bank official in Beijing confirmed there would be a meeting of provincial central bank officials in Beijing this month, but declined to give details.

Central bank deputy governor Liu Mingkang said last month the establishment of regional central bank branches would be finalised by the end of this year. Liu gave no details of the reform.

But Liu said the central bank had finished streamlining its headquarters in Beijing in August, with about 10 per cent of its employeeseither laid off or reassigned elsewhere.

The Financial News daily reported last month that the central bank had set up 13 functional departments responsible for areas including monetary policy, bank supervision, non-bank financial institution supervision, international affairs, statistics and accounting.

In recent months, China has been cracking down on rogue financial institutions. Several have been closed, and others are expected to be shut in a shakeout of the trust and investment company sector.

Hainan Development Bank was closed in June, the first domestic commercial bank to be shut since 1949. It has become insolvent after taking over credit cooperatives saddled with bad debts.

Beijing-based Venturetech Investment Corp, a once powerful trust company, was shut down by the central bank in the same month due to a payments crisis.

At the same time, China is seeking to shore up its major banks, saddled with huge non-performing loans to state-owned enterprises.

Beijing last month began issuing 270billion yuan ($32.53 billion) worth of 30-year special bonds to re-capitalise the major banks.