The PBOC is preparing an onshore foreign-exchange trading pilot for eight banks that clear yuan offshore, citing demand for more liquidity-management options.
People’s Bank of China (PBOC) Governor Pan Gongsheng announced the proposal at the Financial Street Forum in Beijing on Oct. 19 and linked it to increased demand among overseas institutions to manage yuan liquidity. The plan covers Chinese and foreign banks that clear yuan offshore and would allow trades from their own positions. Pan did not identify the eight banks or set a start date.
Eligible offshore clearing banks have been able to apply for access since 2018 to buy and sell yuan for cross-border settlement. The proposed pilot would extend that route to proprietary trading.
PBOC Deputy Governor and State Administration of Foreign Exchange (SAFE) Administrator Zhu Hexin said SAFE plans measures to ease current-account transactions and manage capital-account foreign exchange. SAFE also intends to expand a pilot allowing securities firms to buy and sell foreign currency. Zhu said earlier foreign-exchange packages had benefited more than 150,000 business entities and covered more than $3 trillion in cumulative business through the end of September 2026.
Pan said the PBOC is working with the National Financial Regulatory Administration (NFRA) and the China Securities Regulatory Commission (CSRC) on a liquidity facility for marketwide stress that could trigger a cycle of redemptions and bond sales. Potential users include bank wealth-management subsidiaries, public fund managers and their parent institutions. Access would depend on eligibility rules and high-grade collateral; Pan said operating details would appear in open-market operations announcements.
The PBOC also plans to extend its Standing Lending Facility to foreign banks incorporated in mainland China and banks licensed to operate nationwide. Pan said the facility currently offers collateralized funding to city commercial banks and rural financial institutions for overnight, seven-day and one-month terms. A connection between the interbank and exchange bond markets could begin after testing is complete. The PBOC set no date for the pilot, while SAFE gave no publication timetable for its new packages.
