PBOC plans to enhance yuan internationalization and financial market liberalization

The People’s Bank of China (PBOC) has reaffirmed its commitment to prudently internationalize the yuan and liberalize the financial market, as stated on Thursday. The central bank is set to increase the use of the yuan in global transactions, a move that supports global investors’ asset allocation and encourages more overseas central banks to issue panda bonds.

PBOC’s macro-prudential management bureau aims to enhance bilateral currency swaps and local currency settlement cooperation with foreign central banks. The focus of these efforts will be primarily on ASEAN nations. These measures are expected to increase yuan asset liquidity and enrich risk hedging tools, thereby promoting better foreign transactions.

In addition, the PBOC plans to strengthen supervision of cross-border yuan transactions and refine the cross-border capital flow assessment system. This move is in line with their agenda to promote an orderly institutional opening.

The bank’s efforts have already resulted in 29 bilateral local currency swap agreements with global central banks, boosting trade and investments significantly. There has been a noticeable increase in cross-border yuan settlements for trade with neighboring countries and participants in the Belt and Road Initiative.

These developments mark a significant step towards PBOC’s goal of increasing global yuan usage, providing a more conducive environment for international trade and investment.

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