PBOC Governor Pan Gongsheng Unveils Upcoming Policy Measures, Including a Pilot to Open the Onshore FX Market

On October 19, at the opening ceremony of the 2026 Financial Street Forum annual meeting, Pan Gongsheng, Governor of the People's Bank of China, announced several policy measures the central bank will soon introduce.

First, a liquidity support facility for large redemptions by non-bank institutions. The PBOC will work with the National Financial Regulatory Administration and the China Securities Regulatory Commission to establish the facility. Its purpose is to build a stability mechanism for the bond market and it will form a new macroprudential management tool for the central bank. The facility balances the prevention of systemic risk in the financial system against moral hazard, and will be activated in specific scenarios where asset management institutions face group liquidity risk and the bond market sees a redemption-to-selling negative spiral. Operations with the central bank must meet macroprudential requirements and provide high-grade collateral, to prevent distortions in financial market pricing and the emergence of a bailout illusion, and to maintain market discipline. Eligible institutions include bank wealth management subsidiaries, public fund managers, and their corresponding parent banks and parent securities firms.

Second, expanding the range of institutions eligible for the Standing Lending Facility (SLF). The PBOC will further include domestic foreign-funded legal-person banks, and clarify that national banks are subject to the same operational arrangements, achieving full coverage of deposit-taking financial institutions in China. With foreign-funded legal-person banks included, they will also gain access to central bank liquidity support, which will help them better conduct business.

Third, advancing the interconnection of the interbank and exchange bond markets. Connectivity between financial market infrastructures will facilitate cross-market issuance and trading of bonds, improve market liquidity and price formation, and better leverage the financial market's role in price discovery and resource allocation.

Fourth, a pilot to further facilitate RMB purchase and sale business by foreign financial institutions in the onshore foreign exchange market. The PBOC plans to allow eight Chinese and foreign RMB overseas clearing banks to conduct proprietary trading in the onshore interbank foreign exchange market in line with international financial market practice and trading conventions. This will facilitate deeper participation by foreign institutions in the onshore foreign exchange market and promote the integrated development of onshore and offshore markets. In the future, China will further expand the opening-up of the foreign exchange market based on the pilot's results.

Fifth, issuing guidance on financial support for international science and technology innovation centers together with the Ministry of Science and Technology and nine other departments, covering Beijing (Beijing-Tianjin-Hebei), Shanghai (Yangtze River Delta) and the Guangdong-Hong Kong-Macao Greater Bay Area. The PBOC will accelerate the building of a science and technology finance service system suited to the core functions and international positioning of international science and technology innovation centers, raise the level of full-chain and diversified financial supply, guide financial institutions to strengthen professional service capabilities, enhance regional information sharing, mutual recognition of standards and infrastructure connectivity, and promote greater and pilot investment of relending, the bond market's "tech board" and cross-border investment and financing policies in relevant regions, helping build a high-level science and technology finance ecosystem.

In addition, in June this year the PBOC established a repo facility for foreign central banks, supporting foreign central banks or monetary authorities, international financial organizations and sovereign wealth funds in obtaining RMB liquidity from the PBOC through bond repos, facilitating their RMB liquidity management and RMB asset allocation. The facility has drawn wide attention and welcome. Foreign RMB clearing banks are an important part of the RMB cross-border clearing network, and the PBOC plans to include them among the facility's eligible recipients, which will help foreign clearing banks better serve offshore RMB business.

Earlier this year, the PBOC smoothly switched to a new measurement framework for digital RMB, with its positioning shifting from cash to deposit money. The digital RMB operations and management center established in Beijing last year has been fully operational, becoming a comprehensive digital RMB business platform integrating issuance management, retail, wholesale, blockchain and smart contract services. The number of digital RMB operating institutions has expanded from 10 to 30, covering all systemically important banks.

(Source: Yicai)