The People’s Bank of China (PBOC) has reaffirmed its commitment to prudently internationalize the yuan and liberalize the financial market, it said on Thursday. The central bank will increase the use of the yuan in global transactions, a move that will support global investors’ asset allocation and encourage more overseas central banks to issue panda bonds.
The PBOC’s macro-prudential management bureau aims to increase bilateral currency swaps and local currency settlement cooperation with foreign central banks. The focus of these efforts will be mainly on ASEAN countries. These measures are expected to increase the liquidity of yuan assets and enrich risk hedging tools, thereby promoting better outbound transactions.
In addition, the PBOC plans to strengthen the supervision of cross-border yuan transactions and refine the cross-border capital flow assessment system. This move is in line with its agenda to promote orderly institutional opening.
The bank’s efforts have already resulted in 29 bilateral local currency swap agreements with global central banks, significantly boosting trade and investment. There has been a noticeable increase in cross-border yuan settlements for trade with neighboring countries and participants in the Belt and Road Initiative.
These developments mark an important step toward the PBOC’s goal of increasing the global use of the yuan and creating a more conducive environment for international trade and investment.