According to the new conditions, restrictions on local banks' lending in yuan outside the country will depend on their capital resources. The central bank will have the ability to regulate these restrictions to minimize risks.
All transactions in yuan between banks must comply with the recently established regulatory framework, which requires financial institutions to create comprehensive risk management and internal control systems.
These initiatives are aimed at ensuring liquidity stability in the offshore market, as well as increasing the use of the yuan in international settlements.
This decision aligns with China's goal of enhancing the status of the yuan as a global currency used in financing, as noted in the publication.
It is worth mentioning that these measures are a result of the People's Bank's decision at the end of January, which allowed foreign investors to participate in repo transactions in the domestic market. The proposed initiatives are expected to contribute to the growth of cross-border financing.
In response to the growing interest in offshore yuan, Hong Kong has doubled the total volume of its business lending program in yuan since the beginning of this month. The previously allocated quota was exhausted as clients began to use yuan more actively for trade financing, investments, and business needs.
