SHANGHAI (Reuters) -China’s central bank said on Friday it plans to better regulate cross-border yuan financing between banks, and promote offshore use of the Chinese currency.
China is ramping up the pace of yuan globalisation as Beijing seeks to reduce its reliance on the U.S. dollar amid simmering trade and geopolitical tensions with Washington.
The People’s Bank of China (PBOC) said in draft rules that it will introduce a counter-cyclical mechanism to manage cross-border, interbank yuan financing.
The PBOC also encourages domestic banks to exploit their full potential in cross-border yuan financing, and will set a business ceiling that ensures “adequate room for growth.”
The draft rules were designed to “further support cross-border yuan financing by domestic banks, develop the offshore yuan market, and improve macro-prudential management of cross-border capital flows,” the PBOC said.
Cross-border yuan financing, including lending and bond repo agreements, is the main channel for onshore Chinese banks to pump liquidity into offshore markets and promote overseas use of the yuan.
U.S. Treasury Secretary Scott Bessent plans to meet with Chinese Vice Premier He Lifeng and other senior officials next week in Madrid to continue their discussions on trade, economic and national security issues, the Treasury said on Thursday.
(Reporting by Shanghai Newsroom; editing by Philippa Fletcher)
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