On June 17th, Pan Gongsheng, the Governor of the People's Bank of China, announced at the 2026 Lujiazui Forum that a series of policy measures will be introduced soon.
One is to improve the mechanism for regulating short-term interest rates. To enhance the precision and effectiveness of short-term interest rate regulation, the People's Bank of China will further explore and optimize the interest rate regulation mechanism. On the one hand, based on the establishment of the temporary overnight forward/reverse repo tool in July 2024, the tool usage mechanism will be improved, and the operating interest rate will be adjusted to a 7-day reverse repo operating rate plus or minus 25 basis points, narrowing the range from 70 basis points to 50 basis points. On the other hand, further enrich the toolbox of open market operations, timely increase the variety of overnight reverse repo operations, and better match the short-term liquidity needs of the banking system.
The second is to establish overseas central bank repurchase tools. The establishment of repurchase instruments of overseas central bank institutions, including overseas central banks or monetary authorities, international financial organizations and sovereign wealth funds, can obtain RMB liquidity from the People's Bank of China by means of repurchase of high-grade bonds such as Chinese treasury bond bonds, so as to facilitate the RMB liquidity management and RMB asset allocation of overseas central bank institutions.
Thirdly, pilot offshore RMB and foreign exchange trading will be carried out in the Shanghai Free Trade Zone. The People's Bank of China will authorize six banks including Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, and CITIC Bank to conduct offshore RMB foreign exchange transactions in the Shanghai Free Trade Zone using the China Foreign Exchange Trading Center platform. In the future, the People's Bank of China will further promote the development of the offshore RMB foreign exchange trading market based on the pilot situation.
The fourth is to study the establishment of specific scenario non bank liquidity support macro prudential tools. When there is systemic pressure in the bond and other markets, normal liquidity channels are blocked, and institutional groups face liquidity crises that may trigger systemic risks, emergency liquidity is provided to non bank institutions through swaps.
Fifth, in conjunction with the Shanghai Municipal Government and relevant departments, we will introduce the "Action Plan for the Development of Offshore Finance in Shanghai International Financial Center". The People's Bank of China will gradually improve the institutional system that adapts to offshore finance, including business rules, risk management, and business environment. We will steadily promote offshore financial businesses such as free trade offshore bonds, offshore trade financial services, and international financial centers, and support Shanghai in building an offshore financial business system that matches international financial centers.
The sixth is the official listing of the interbank market data reporting database. By centralizing the collection of trading, custody, settlement and other data information, we aim to enhance our ability to penetrate and monitor financial markets, serving regulation and the market. (Looking into the New Era)