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 enhance the framework for cross-border interbank financing in Renminbi, aiming to support the development of the offshore Renminbi market and improve policy transparency and consistency [1][2][3]. Group 1: Policy Development - The notice aims to unify the management of cross-border interbank financing, which includes various forms of Renminbi liquidity provision between domestic and foreign banks [1][3]. - Since 2009, various cross-border interbank financing products have been introduced, but the previous management lacked clarity and transparency, necessitating a more structured approach [3][4]. - The notice reflects a balance between fostering innovation in cross-border financing and ensuring regulatory compliance [4][5]. Group 2: Market Demand and Stability - The demand for Renminbi liquidity in the offshore market has increased, with the cross-border payment amount expected to reach 64 trillion yuan in 2024 [2]. - The notice is designed to stimulate domestic banks' willingness to engage in cross-border financing by providing clearer rules and reducing operational uncertainties [4][5]. - By linking the net outflow limits to banks' capital levels, the notice encourages a risk-neutral approach among financial institutions, promoting stable and healthy business development [5][6]. Group 3: Macro-Prudential Management - The notice introduces a macro-prudential management framework for cross-border interbank financing, allowing the PBOC to adjust parameters to manage liquidity flow effectively [6]. - This framework is intended to provide a stable and orderly outflow of Renminbi to foreign markets while maintaining risk control [6].

Core Viewpoint - The People's Bank of China (PBOC) has released a draft notice to unify the framework for cross-border interbank financing in RMB, aiming to stabilize liquidity expectations in the offshore RMB market [1][2]. Summary by Sections Policy Transparency and Rules - The draft notice aims to enhance the transparency and regulatory framework of cross-border interbank financing policies, which includes various forms of RMB funding between domestic banks and foreign institutions [1][2]. - It supports domestic banks in autonomously conducting business within a net lending limit, thereby reducing concerns over ambiguous business rules and encouraging banks to expand their operations [2]. Balancing Development and Safety - The notice emphasizes macro-prudential management of cross-border capital flows to ensure the orderly outflow of onshore RMB while meeting reasonable cross-border RMB usage demands [3]. - It shifts from a piecemeal rule-making approach to a unified management framework for RMB cross-border interbank financing, addressing previous issues of unclear rules and lack of comprehensive management [3][4]. Risk Management and Adjustment Mechanisms - The notice introduces a counter-cyclical adjustment mechanism, with initial risk management factors set at 0.06 and macro-prudential adjustment parameters at 1, allowing the PBOC to adjust these parameters as needed [3]. - It establishes a unified upper limit for net lending in RMB cross-border interbank financing, enabling the PBOC to manage liquidity provision to offshore markets effectively [4].

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][2]. Group 1: Key Content of the Notice - The notice covers various types of RMB cross-border interbank financing, focusing on substantial creditor-debtor relationships between domestic banks and foreign institutions, excluding investment or purchase of debt instruments [1]. - The maximum term for RMB cross-border interbank financing is set at one year, aligning with the requirement for domestic interbank business [1]. - A counter-cyclical adjustment mechanism is introduced, with limits on net RMB cross-border interbank financing based on tier-one capital and risk management factors, allowing for adjustments by the PBOC [2]. - Domestic banks are encouraged to conduct business in compliance with market demand and regulations, with a focus on strong international settlement capabilities and robust risk management [2]. - The notice applies to domestic banks with international settlement capabilities, including Chinese banks, foreign-owned banks, joint-venture banks, and foreign bank branches, while excluding rural financial institutions from participating in RMB cross-border interbank financing [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 offshore RMB market and ensure stable liquidity provision [1][2]. Group 1: Policy Objectives - The notice reflects a clear direction towards balancing high-quality development with high-level security, allowing banks to meet market demands while promoting the use of RMB across borders [1][2]. - It aims to provide stable liquidity to the offshore market, which is crucial for the internationalization of the RMB, as evidenced by RMB becoming the largest settlement currency for China's external payments and the second-largest trade financing currency globally [2]. Group 2: Management Framework - The new regulations will unify the management of RMB cross-border interbank financing, addressing previous issues of unclear rules and lack of transparency in the management of outbound financing [3][4]. - The notice covers various types of RMB cross-border interbank financing, shifting from a product-specific rule-making approach to a more comprehensive framework that emphasizes substantive debt relationships [4]. Group 3: Risk Management - The notice links the net outbound balance of banks to their Tier 1 capital, promoting a principle of "doing business according to capital capacity," which encourages a risk-neutral mindset among financial institutions [5]. - A counter-cyclical adjustment mechanism will be introduced to manage cross-border capital flows, allowing the PBOC to adjust parameters to stabilize RMB liquidity provision to offshore 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 (PBOC) has drafted a notice to support domestic banks in conducting cross-border RMB interbank financing, aiming to develop the offshore RMB market and enhance macro-prudential management of cross-border capital flows [1] Group 1: Key Aspects of the Notice - The notice covers various types of RMB cross-border interbank financing, supporting the standardized development of these businesses and providing stable liquidity for the offshore RMB market [1] - The maximum term for RMB cross-border interbank financing is set at one year, aligning with the requirement for domestic interbank business [2] - A counter-cyclical adjustment mechanism is introduced, with limits on net RMB cross-border interbank financing based on tier 1 capital and risk management factors [2] - Domestic banks are encouraged to develop their businesses in accordance with market demand and legal compliance, with a focus on strong international settlement capabilities and robust risk management [2] - The applicable institutions include domestic banks with international settlement capabilities, while rural financial institutions are excluded from engaging 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].