People's Bank of China: speeches

1. Five measures announced up front

Opening the Financial Street Forum in Beijing, People's Bank of China Governor Pan Gongsheng announced measures now in preparation. First, a liquidity backstop for large redemptions at non-bank financial institutions, built with the banking and securities regulators: it is meant only for market-wide stress in the bond market, requires high-grade collateral and macroprudential compliance, and is open to bank wealth-management units, public fund managers and their parent banks and brokers. Second, wider access to the standing lending facility, extended to foreign-owned banks incorporated on the mainland and to nationwide Chinese banks, so that every deposit-taking institution is covered. Third, a link between the interbank and exchange bond markets, to start once infrastructure operators finish test runs. Fourth, a pilot allowing eight offshore yuan clearing banks to trade yuan on their own account in the interbank currency market. Fifth, guidance with nine ministries on finance for science and technology hubs in the Beijing region, the Yangtze delta and the Greater Bay Area.

2. Other recent steps

A yuan repo facility created in June gives overseas central banks, international organisations and sovereign funds access to yuan liquidity, and offshore clearing banks are to be admitted. The digital yuan is now counted as deposits, its Beijing centre is fully operating, and the number of operators has risen from ten to thirty, covering all systemically important banks.

3. Rebuilding the monetary policy framework

Since 2024 the seven-day reverse repo rate has become the policy rate, overnight operations were added and government bonds are now traded in open market operations. Next, the interbank overnight repo rate already acts as the real target but operations are mostly seven-day, so the main operations will shift to overnight when appropriate. Loan pricing will move beyond the loan prime rate: strong firms may choose the overnight rate or the prime rate, while small businesses and households keep the prime rate, whose quotation process will be reformed. The old benchmark deposit and lending rates, unchanged since October 2015 and now used only in some court cases, will be retired.

4. The yuan exchange rate

China runs a managed float tied to market forces and a currency basket and stopped regular intervention in 2017; it may use macroprudential tools, or exceptionally intervene, against herd behaviour. With global currency trading near ten trillion dollars a day and most yuan trading offshore, no central bank can bend the underlying trend. Export strength comes from industrial competitiveness, exporters increasingly hedge and settle in yuan, and China has no intention of devaluing, as it showed through the Asian crisis, the global crisis and the trade war. Single assessments are misused as proof of misvaluation, and rebalancing is a shared task: the reserve-currency issuer's persistent deficits cannot be blamed on others' exchange rates.

5. Yuan internationalisation

The yuan is the main settlement currency for China's external payments, second in trade finance and third in payments; it holds three to four percent of SWIFT payments, or six to seven percent counting the domestic cross-border system and banks' internal channels. Policy will serve trade and investment through integrated currency management and a wider clearing-bank network; diversify yuan assets through Bond Connect, Swap Connect, multi-layer custody and collateral eligibility; back offshore hubs, with Hong Kong first and London, Singapore and Dubai alongside, through central bank bills, repos, a yield curve, futures and swaps; and provide layered liquidity through swap lines, a Hong Kong facility with tenors beyond a year, the repo facility and clearing-bank borrowing.

6. Artificial intelligence and financial policy

Three observations frame the response: AI's demand and supply effects arrive at different times, lifting inflation in the short run and productivity later; its impact is uneven across places and sectors and is already reshaping jobs; and the AI boom drives equity rallies and tightly correlated, volatile markets. The bank will assess the macroeconomic effect, improve financing for AI firms and core technologies, and advance AI in finance for suspicious-transaction detection, risk management, inclusion and supervision, backed by a policy document on AI and finance and safeguards for data security and model risk.

1. Hong Kong's progress and advantages

At a Hong Kong financial summit attended by Chief Executive John Lee, PBOC Governor Pan Gongsheng praised the city's momentum since early 2025: strong listings, dim sum bond issuance above 2 trillion yuan, and its status as the largest offshore yuan centre and largest cross-border wealth hub. He credits central government support and cites Hong Kong's open environment, capital markets, legal system and mainland links, plus China's stable macro policy, innovation focus and 15th Five-Year Plan, with growing global demand for the yuan in investment, financing and reserves. He noted accommodative monetary policy, proactive fiscal policy and a sound financial system on the mainland, and that Hong Kong will draft its first five-year development plan to fit the national strategy.

2. Connectivity and diversified markets

First, deepen connectivity: more listings and bonds, and wider stock, bond, wealth and swap Connect schemes; the Southbound Bond Connect annual quota rises from 500 to 800 billion yuan, its bonds become repo collateral, products widen to Hong Kong dollar and Macau bonds, and China's reserves will raise their Hong Kong allocations. Second, diversify beyond equities into bonds, gold, commodities and derivatives: with global rate and inflation swings rising, the stability of Chinese bonds offers diversification, and low yuan financing costs give Hong Kong a rare chance to draw sovereign and corporate issuers and become the region's leading financing hub. Five-year yuan government bond futures will launch soon, the Bond Connect company will upgrade into a trading-platform operator with CFETS, Northbound bonds will count as collateral at local clearing houses, and a gold vault and clearing link with the Shanghai Gold Exchange plus more yuan commodity products will follow.

3. The offshore yuan hub and stability

Third, strengthen the offshore yuan hub: the HKMA's business facility rises from 200 to 500 billion yuan with tenors up to three years, central banks get a yuan repo facility whose first operation was done with the HKMA, a Bank Indonesia-HKMA local-currency framework supports direct yuan-rupiah trade, fast-payment links expand to more institutions, scenarios and risk controls, and more central bank bills and offshore government bonds will deepen the asset pool; Hong Kong handles over 70% of cross-border yuan settlement. The finance ministry will also be backed in enlarging and diversifying its offshore government bond issues. Fourth, safeguard stability: Hong Kong came through the Asian crisis and the 2008 shock with central support, and, recalling Zhu Rongji's 1998 pledge, he said the central government will keep giving full support, given China's reserves, the world's largest. He invited global investors to join.

1. Six new measures

At the Lujiazui Forum in Shanghai, in front of Vice Premier He Lifeng and city leaders, the Governor of the People's Bank of China announced a package of measures. The bank will refine its short-term rate framework: the ad hoc overnight repo window will be set within a quarter point above or below the seven-day policy rate, narrowing the band from 70 to 50 points, and overnight reverse repos may be added to open market operations. A renminbi repo facility will let foreign central banks, international institutions and sovereign funds borrow yuan against high-quality bonds such as Chinese government debt. Six large banks will pilot offshore yuan-foreign exchange trading in the Shanghai free trade zone. The bank is studying an emergency liquidity backstop for non-bank financial firms, provided through swaps only in systemic market stress and conditioned on prudential rules and top-grade collateral to limit moral hazard. An action plan for offshore finance in Shanghai, a central repository of interbank trading and settlement data, an international e-CNY operations centre and a cross-border e-CNY transfer platform complete the list.

2. From banks to markets

China's financing has long relied on bank loans, but this is changing. In 2025, bonds and shares together provided 47% of new financing to the real economy against 45% for loans, the first time markets overtook credit. In the stock of financing, the bank share has fallen from almost all in the 1990s to about two-thirds. Over ten years, property and infrastructure have dropped from over 60% of new loans to about 10%, while five priority areas now take over 70%. Lending to small technology firms grows about 20% a year, technology bonds have reached about 2.6 trillion yuan, and the value of the innovation-focused boards rose nearly 50% in 2025.

3. Why the shift is lasting

Financing to the economy exceeds 450 trillion yuan and broad money 350 trillion, so further rapid expansion is neither easy nor needed. Loans to property and local government vehicles are shrinking, and using existing credit better matters as much as adding new credit; slower but better-allocated lending may become normal. Growth used to rest on property, infrastructure and heavy industry, which borrow long against solid collateral. New sectors in technology, advanced manufacturing and green industry invest in research and intangible assets, carry higher risk and need less bank debt, so start-ups depend on venture and private equity before turning to loans, bonds and shares. China therefore needs diverse markets alongside better-targeted bank credit.

4. Markets built over three decades

China now has a full range of markets, from shares and bonds to gold, commodities and derivatives. Listed companies have grown from eight in Shanghai in the early 1990s to 5 500 worth over 110 trillion yuan, and bonds outstanding from under 500 billion in 1997 to more than 200 trillion, both second worldwide. Currency trading covers over 40 currencies and more than $42 trillion a year. Access schemes and connections with Hong Kong have brought foreign holdings of onshore yuan assets above 10 trillion, and Chinese securities are in major global indices.

5. Five priorities

During the 15th Five-Year Plan, the bank will widen the range of markets and products, including technology boards, long-term investment, asset management and green bonds; deepen market pricing, the government bond yield curve and careful development of rate and currency derivatives; strengthen the legal framework, default resolution and the integrity of underwriters, raters, auditors and lawyers; enlarge macroprudential tools for currency, stock and bond markets to contain contagion; and open further, improving connection schemes, panda bonds, cross-border payments and offshore yuan supply, while supporting Hong Kong as the offshore yuan hub and preventing systemic risk.