According to the new rules, limits on local banks' lending abroad in yuan will depend on their capital conditions, allowing the PBOC to regulate these limits for risk management.
All transactions between banks in yuan must comply with the updated regulatory framework, which requires financial institutions to establish comprehensive risk management and internal control systems.
These initiatives aim to maintain liquidity in the offshore market and promote the broader use of the yuan in international settlements.
This decision aligns with Beijing's efforts to elevate the status of the yuan as a global funding currency, as noted in the publication.
It is worth recalling that these steps by the PBOC are a result of its decision at the end of January when foreign investors were allowed to participate in REPO operations in the domestic market. These measures are expected to facilitate the growth of cross-border financing.
In response to the growing interest in offshore yuan, Hong Kong has doubled the overall volume of its yuan business lending program this month. The previously allocated quota for banks was exhausted as clients began to use the yuan more actively for trade financing, capital investments, and other business purposes.
