PBOC Deputy Governor Tao Ling: More Policy Measures to Smooth the International Use of the RMB

On October 16, Tao Ling, Member of the Party Committee and Deputy Governor of the People's Bank of China, delivered a keynote speech on advancing RMB internationalization and smoothing the circulation of the RMB's international use at the Global Asset Management Forum 2026 Shanghai Suhe Bay Conference. She said the central bank will further improve policy measures to smooth the international circulation of RMB use, building an organic chain of "receiving RMB, using RMB, investing RMB and hedging RMB risk."

Tao noted that the international monetary system has kept evolving over centuries. The dominant international currency carries the attributes of a global public good, and its succession reflects profound changes in the global landscape. After World War II, an international monetary system centered on the US dollar, supplemented by other currencies, took shape. At present, there is much discussion about the endogenous instability of the international monetary system, and the mainstream view is that the system is undergoing changes and may evolve toward a multipolar configuration in the future, which would help push sovereign currency countries to strengthen policy discipline and enhance the resilience of the international monetary system.

"Amid these discussions, RMB internationalization has drawn wide attention," Tao said. RMB internationalization means the RMB is widely used around the world and performs pricing, payment, investment-financing and reserve functions in the international monetary system. China has maintained long-term political, economic and social stability, ranks second globally in economic size, has the most complete range of industrial categories in the world, and is a major trading partner of more than 160 countries and regions. The RMB exchange rate has remained basically stable at a reasonable and balanced level, creating favorable conditions for RMB internationalization and making it a historical inevitability that the RMB will gradually match China's economic weight and major-country status. The RMB becoming an international currency will also provide a reliable new option for global trade and investment and financing activities.

Over the past decade or more, the People's Bank of China, in line with economic and social development needs and market demand, has steadily advanced the international use of the RMB together with relevant departments. On the payments front, a multi-channel, wide-coverage RMB cross-border payment and clearing network is taking shape: the Cross-Border Interbank Payment System (CIPS), fast payment systems onshore and offshore, and QR code interoperability are all advancing steadily, and cross-border use of the central bank's digital currency has made positive progress. On a full-caliber basis, the RMB is the world's third-largest payment currency.

On investment and financing, the willingness of overseas entities to raise RMB financing has risen markedly. Over the past five years the RMB has consistently ranked among the top three in global trade financing, with its share rising from about 2% to about 7%. The global appeal of RMB assets is also rising: overseas entities can invest in onshore RMB assets through Bond Connect, Stock Connect and qualified investor access schemes; the range of RMB assets available offshore is expanding; and RMB government bonds and central bank bills are now issued offshore, with the outstanding stock of dim sum bonds and panda bonds exceeding RMB 2 trillion.

On foreign exchange trading, the RMB is the world's fifth most traded currency in FX transactions and the fastest growing among major currencies. The range of participants in the domestic interbank FX market keeps expanding, with foreign central banks and monetary authorities, international financial organizations, sovereign wealth funds and RMB clearing banks all able to take part.

On international monetary cooperation, Hong Kong, London and Singapore have each developed distinctive offshore RMB markets. On reserves, according to IMF data, the scale and share of RMB foreign exchange reserves rose as of the end of the second quarter of 2026, ranking seventh among major reserve currencies. The RMB's weight in the IMF's Special Drawing Rights basket ranks after the US dollar and the euro, at 12.28%.

Historical practice and research show that becoming an international currency requires forming a closed loop of pricing, payment and settlement, investment and financing, and asset allocation. Tao pointed out that the current dominant international currency has strong network effects and path dependence. Although the RMB's share in trade settlement has risen, the RMB has yet to form a smooth international circulation from "being available" to "being convenient to use" and then to "being held for the long term."

On how to smooth the international circulation of RMB use, Tao said that while building RMB pricing, settlement and payment-clearing systems, the central bank will further optimize its measures to construct the organic chain of "receiving RMB, using RMB, investing RMB and hedging RMB risk."

First, providing RMB liquidity to offshore markets. Offshore RMB liquidity is mainly supplied through three channels: trade, direct investment and financing, with financing including banks' offshore loans, corporates' offshore lending, and the issuance of RMB bonds and equities. Since 2022, the central bank and relevant departments have improved a multi-tiered offshore RMB liquidity supply mechanism. Tao said that to better meet offshore RMB liquidity demand, the central bank will continue to support financial institutions in conducting offshore RMB lending and cross-border trade financing, improve banks' interbank cross-border RMB financing policies, encourage more overseas institutions to participate in panda bond issuance and trading, support Hong Kong in developing its dim sum bond market, enrich liquidity management and risk management tools, and — building on the already launched offshore RMB bond repo and cross-border repo businesses — continue to promote repo and derivatives market development as well as product innovation and mechanism improvement. The central bank will also support RMB clearing banks in better playing their liquidity supply role in offshore markets, give play to the currency swap mechanism, and establish regular swap fund usage arrangements with more eligible countries and regions.

Second, broadening channels for RMB asset allocation. Overseas entities can currently allocate RMB assets through multiple channels. As of the end of June 2026, 1,200 overseas institutions had entered the domestic interbank bond market, and overseas holdings of domestic bonds reached RMB 3.2 trillion. The scale and appeal of offshore RMB government bonds are growing, and their use as eligible collateral is expanding. Overseas entities can also invest in the domestic stock market through Stock Connect within prescribed limits and invest in RMB derivatives markets; they can invest in the interest rate swap link between Hong Kong and the mainland, whose product range was further enriched in May 2025 with the addition of interest rate swap contracts referencing the loan prime rate (LPR).

Tao said that going forward, the central bank will support more types of overseas investors in participating in Chinese financial markets in appropriate ways, investing in domestic stocks, equity, bonds, derivatives and commodities. It will develop the RMB foreign exchange market, enrich tradable products and advance FX derivatives trading. In addition, it will increase the supply of RMB assets in offshore markets, promote RMB bonds as globally recognized eligible collateral, and strengthen the interconnection of domestic and offshore financial market trading platforms and financial infrastructure.

Third, raising the level of capital account opening. "Capital account opening and capital account convertibility are not exactly the same thing," Tao stressed. If a transaction uses only the RMB, it involves no currency conversion, only the cross-border flow of the currency. Therefore, measuring the level of capital account opening should take into account not only currency conversion but also cross-border flows of currencies, and not only foreign currency but also domestic currency. If currency conversion or cross-border flows are restricted, the willingness of various entities to obtain and hold RMB may decline.

Tao said the central bank will, in line with the requirements of the 15th Five-Year Plan, work with the State Administration of Foreign Exchange and other relevant departments to prudently improve the convenience of cross-border fund conversion and cross-border capital flows, improve channels for opening up financial markets, integrate and optimize institutional rules, support the building of the Shanghai International Financial Center, and consolidate and elevate Hong Kong's status as an international financial center. Throughout this process, it will balance opening-up and security, improve macroprudential management of cross-border capital flows, and refine a risk prevention system matched to capital account opening, fostering a stable and favorable monetary and financial environment.

"Advancing RMB internationalization is a work of great historical significance and contemporary value; it must be pursued actively and prudently, step by step, with sustained effort," Tao said. She expressed the hope to continue strengthening communication and cooperation with all parties, expand the high-level opening-up of China's financial sector, promote RMB internationalization, and inject fresh positive energy into global economic and financial stability.