Core Viewpoint - The People's Bank of China (PBOC) has released a draft notice to support domestic banks in conducting cross-border RMB interbank financing, aiming to develop the offshore RMB market and improve macro-prudential management of cross-border capital flows [1][2]. Summary by Sections Section 1: Unified Regulation and Risk Management - The draft notice introduces unified regulation for RMB cross-border interbank financing, previously scattered across various pilot programs, with differentiated calculation methods for domestic and foreign banks [1] - For domestic banks, the net lending limit is calculated as: Net Capital × Risk Management Factor × Macro-prudential Adjustment Parameter, with initial values set at 0.06 and 1 respectively [1] - A warning will be triggered when the net lending balance reaches 80% of the limit to ensure manageable business scale [1] Section 2: Regulatory Coverage - The draft encompasses all RMB financing activities between domestic banks and foreign institutions (excluding clearing banks) that establish substantive creditor-debtor relationships, but excludes investments in foreign debt instruments [2] Section 3: Business Duration and Entry Requirements - The financing business duration is capped at one year, aligning with domestic interbank business duration requirements [2] - Only domestic banks with strong international settlement capabilities are allowed to participate, including state-owned banks, foreign-owned banks, and joint-venture banks, with specific management and reporting obligations to the PBOC [2] Section 4: Exclusions and Reporting - Rural financial institutions such as rural commercial banks and credit cooperatives are prohibited from engaging in this business due to their limited international settlement and risk management capabilities [2] - All participating banks must report information monthly to the RMB Cross-border Payment Information Management System (RCPMIS) and retain relevant business materials for five years [2] Section 5: Feedback Period - The deadline for feedback on the draft notice is set for September 27, 2025 [3]

Core Viewpoint - The People's Bank of China (PBOC) has drafted a notice to support domestic banks in conducting RMB cross-border interbank financing, aiming to enhance the development of the offshore RMB market and provide stable liquidity [1][2]. Group 1: Policy Objectives - The notice reflects a clear direction of balancing high-quality development with high-level security, supporting banks to meet market demand for RMB cross-border interbank financing [1][2]. - It aims to provide stable liquidity to the offshore market, promoting the use of RMB across borders, as RMB has become the largest settlement currency for China's foreign trade [2][3]. Group 2: Market Context - The RMB internationalization process has progressed steadily, with RMB becoming the second-largest trade financing currency globally, and the cross-border payment amount expected to reach 64 trillion yuan in 2024 [2]. - The demand for RMB liquidity in the offshore market has significantly increased, driven by the willingness of foreign entities to hold and use RMB [2]. Group 3: Management Framework - The notice integrates the previously separate management of RMB cross-border interbank financing into a unified framework, addressing issues of unclear rules and lack of transparency [3][4]. - It establishes a comprehensive management system that covers various types of RMB cross-border interbank financing, ensuring both innovation and regulatory compliance [4]. Group 4: Risk Management - The notice links the net outflow limit for banks to their Tier 1 capital, promoting a risk-neutral approach among financial institutions [5]. - A counter-cyclical adjustment mechanism is introduced to manage cross-border capital flows, allowing the PBOC to adjust parameters to stabilize RMB liquidity provision to foreign markets [6].

Core Viewpoint - The People's Bank of China (PBOC) has drafted a notice to support domestic banks in conducting cross-border RMB interbank financing, aiming to develop the offshore RMB market and improve macro-prudential management of cross-border capital flows [1] Summary by Sections Coverage of RMB Cross-Border Interbank Financing - The notice encompasses various RMB financing activities between domestic banks and foreign institutions, excluding investment or purchase of debt instruments like interbank certificates of deposit and bonds [1] Business Duration and Mechanisms - The duration for RMB cross-border interbank financing is capped at one year, aligning with the domestic interbank business duration [2] - A counter-cyclical adjustment mechanism is introduced, setting limits on net financing outflows based on tier-one capital and risk management factors [2] Support for Domestic Banks - Domestic banks are encouraged to develop their business in accordance with market demand and legal compliance, requiring strong international settlement capabilities and robust risk management systems [2] Applicable Institutions - The notice applies to domestic banks with international settlement capabilities, including Chinese banks, foreign-owned banks, joint venture banks, and foreign bank branches. Rural financial institutions are excluded from participating in RMB cross-border interbank financing [3]

Core Viewpoint - The People's Bank of China has released a draft notice regarding the cross-border interbank financing business in RMB, aiming to support domestic banks in conducting this business in accordance with market demand and under principles of legality, compliance, and risk control [1] Group 1: Regulatory Framework - The draft notice encourages domestic banks, including state-owned banks, foreign-owned banks, and joint-venture banks, to manage cross-border interbank financing under unified management by their headquarters [1] - It emphasizes the principle of substance over form, requiring all RMB cross-border interbank financing activities to be included in the management scope [1] Group 2: Risk Management - The notice mandates the establishment and improvement of risk management and internal control mechanisms for the banks involved in cross-border interbank financing [1]

Core Viewpoint - The People's Bank of China (PBOC) is soliciting opinions on a notice regarding the cross-border interbank financing business in Renminbi, aiming to support domestic banks in conducting such business in a compliant and risk-controlled manner [1][2]. Summary by Sections Section 1: Definition and Scope - Cross-border interbank financing refers to the financing activities between domestic banks and foreign institutions, focusing on Renminbi liquidity, including account financing and bond repurchase, but excluding investments in debt instruments [2][3]. Section 2: Management and Compliance - Domestic banks, including Chinese-funded, foreign-funded, and joint-venture banks, must manage cross-border financing under the unified management of their headquarters, ensuring robust risk management and internal control mechanisms [3][4]. Section 3: Financing Limits and Risk Management - The maximum term for cross-border interbank financing is set at one year, with net financing balances to foreign institutions capped based on the bank's capital levels and risk management factors [4][5]. - A warning mechanism must be established when the net financing balance reaches 80% of the limit [4]. Section 4: Regulatory Oversight - The PBOC will conduct macro-prudential management of 27 major domestic banks, while local branches will manage other banks' cross-border financing activities [5][6]. - Adjustments to risk management factors and parameters may be made based on market conditions [5]. Section 5: Reporting and Compliance - Banks must report their cross-border financing activities to the PBOC, with a retention period for business materials set at five years [6][7]. - Rural financial institutions are prohibited from engaging in cross-border interbank financing, with existing contracts maturing naturally [6]. Section 6: Implementation Timeline - The notice will take effect from a specified date in 2025 [7].