The People's Bank of China issued a Notice on RMB cross-border interbank financing by banking financial institutions and published an accompanying Q&A explaining a unified supervisory framework for these activities. The approach applies a “substance over form” test to bring all RMB interbank financial intermediation with substantive creditor-debtor relationships between domestic banks and overseas institutions into scope, and introduces a counter-cyclical mechanism that caps banks’ net RMB cross-border interbank financing based on capital or financial strength and adjustable parameters. The Notice applies to China-incorporated banks with international settlement capabilities, including Chinese banks, wholly foreign-owned banks, Sino-foreign joint venture banks, and domestic branches of foreign banks, with rural financial institutions permitted to participate if they meet specified qualifications. Net financing balance caps are set as formulas using Tier 1 capital metrics multiplied by a cross-border business adjustment parameter and a macroprudential adjustment parameter, and banks must manage their positions so the net financing balance does not exceed the limit at any point. Certain activities are excluded from the net balance calculation, including financing tied to real trade finance backgrounds and indirect RMB lending to overseas enterprises funded via overseas banks (while still subject to overseas loan management requirements), and financing between domestic banks and overseas RMB clearing banks where funds are remitted to a dedicated interbank current account in China for centralized RMB clearing operations. Domestic banks must report relevant information to the RMB Cross-border Receipt and Payment Information Management System (RCPMIS) and the People's Bank of China, including for excluded transactions. The People's Bank of China indicated it will adjust the relevant parameters in a timely manner based on offshore RMB market development, cross-border capital flows, and banking sector conditions, and will further refine policies and business development guidance as implementation progresses.
Central Bank of the Republic of China 2026-02-26
People's Bank of China sets macroprudential net balance limits for banks’ RMB cross-border interbank financing
The People's Bank of China issued a Notice establishing a unified supervisory framework for RMB cross-border interbank financing, applying a "substance over form" test to include all substantive creditor-debtor relationships. The framework introduces a counter-cyclical mechanism capping banks' net RMB cross-border financing based on capital strength and adjustable parameters. It applies to China-incorporated banks with international settlement capabilities, with specific exclusions and reporting requirements outlined.