Reserve requirement on RMB deposits to help improve offshore CNH liquidity

RMB deposits can be placed at onshore agency banks by offshore participating banks, or they can also be placed at onshore PBoC branches through offshore RMB clearing banks. Therefore, if the CNH market has any impact, the reserve requirement will likely put off offshore banks from bringing RMB deposits onshore that will assist in rebounding offshore CNH liquidity. Nevertheless, the precise affect will depend on the flexibility of offshore participating banks in using the RMB and how the additional cost is passed on to participating banks via the clearing banks.