China’s Central Bank to Support Offshore CNY Market and Cross-Border Transactions
China’s central bank, the People’s Bank of China (PBOC), has affirmed its commitment to supporting the development of the offshore Chinese yuan market and cross-border payment system. In an interview with PBOC Deputy Governor Tao Ling, the future steps for promoting the country’s legal tender in the global market and further internationalization were discussed.
Tao highlighted that the central bank has been responsive to both domestic and international economic conditions and market demands. It aims to provide businesses, both local and international, with a more diverse and convenient choice of currency. Currently, the yuan ranks as the fourth most utilized currency for global payments, the third most utilized currency in trade financing, and the fifth most traded currency in foreign exchange markets.
To bolster the offshore CNY market, the central bank will enhance the liquidity supply mechanism, improve the issuance of sovereign bonds overseas in the long term, and expand financial market connectivity between the mainland and Hong Kong. Efforts will also be concentrated on establishing and enhancing financial infrastructure, including the Cross-border Interbank Payment System (CIPS) for yuan.
In terms of cross-border transactions, the PBOC aims to increase the security and efficiency of yuan clearing and settlement. This involves optimizing the layout of CNY clearing banks and effectively utilizing currency swap mechanisms to facilitate the construction of the overseas market.
Tao Ling, who assumed the role of the first female deputy chief of the People’s Bank of China in nine years in March 2024, brings a wealth of experience as a central banker and financial regulator.
SWIFT China President Wen Yang, in a separate communication, discussed the challenges and solutions for cross-border central bank digital currency (CBDC). He pointed out the significant disparities in technological paths and standards among economies, resulting in fragmentation and data silos. SWIFT plans to expand its CBDC solutions to simplify digital transactions and enhance support for on-chain forex settlements and cross-border payments.
