Distinguished Party Secretary Yin Li, Mayor Yin Yong, and dear guests,
Good afternoon.
Let me begin by extending my deepest appreciation to the Beijing Municipal Committee of the Communist Party of China (CPC) and the Beijing Municipal People’s Government, especially Party Secretary Yin Li and Mayor Yin Yong, and also to those who have supported the work of the People’s Bank of China (PBOC).
With extensive global influence and broad market reach, the Financial Street Forum provides an important platform for the central bank to communicate with the market. Taking this opportunity, I would like to announce upfront several policy measures in the pipeline.
First, the PBOC will, together with the National Financial Regulatory Administration (NFRA) and the China Securities Regulatory Commission (CSRC), set up a liquidity backstop for large redemptions by non-bank financial institutions (NBFIs). The PBOC has consulted with market participants about this facility on multiple occasions. Designed as a stabilization mechanism for the bond market, the facility will serve as a new tool for macroprudential management. We try to strike a fine balance between forestalling systemic financial risks and preventing moral hazard in financial markets. Therefore, it is designed for contingent scenarios where asset managers face market-wide liquidity stress, and there is a negative feedback loop between redemption and sell-off in the bond market. Users of this facility are subject to macroprudential requirements, and must provide high-grade collateral. These are the guardrails we put in place to prevent distortions in market pricing, avoid expectations of a blanket backstop, and maintain market discipline. Institutions eligible for the facility include wealth management subsidiaries of banks, public fund managers, and their corresponding parent banks and parent securities firms. Detailed operational information will be disclosed in open market operations (OMOs) announcements.
Second, the PBOC will expand the scope of institutions eligible for Standing Lending Facility (SLF). At present, the SLF, as an instrument in OMOs, provides collateralized financing to city commercial banks and rural financial institutions to meet their temporary liquidity needs, with tenors ranging from overnight, 7 days to one month. We will expand the scope of eligible institutions to foreign banks incorporated in the mainland and Chinese banks licensed to operate across the mainland. After the expansion, the facility will cover all deposit-taking financial institutions, and provide eligible foreign banks with access to the PBOC’s liquidity support, which would be a boon for their business in China.
Third, the PBOC will push for a connectivity program between the interbank bond market and the exchange bond market. Connectivity among financial market infrastructures can facilitate bond issuance and trading across markets, increase market liquidity, promote price formation, and better leverage the role of financial markets in price discovery and resource allocation. The PBOC and CSRC have already laid the groundwork for the bond market connectivity program. It will be launched after infrastructure providers and market participants complete test runs.
Fourth, the PBOC will roll out a pilot initiative to allow overseas financial institutions to participate in RMB trading in China’s interbank FX market. In recent years, with rising global use of the RMB, the demand of overseas financial institutions for RMB liquidity management has also been on the rise. Therefore, the PBOC plans to introduce a pilot initiative to allow eight Chinese and foreign RMB clearing banks in offshore markets to conduct proprietary RMB trading in China’s interbank FX market in line with international practices. The pilot is aimed at enabling overseas institutions to engage more deeply in the onshore FX market, and fostering integrated development of onshore and offshore markets. Looking ahead, we will take stock of the pilot and further open up the FX market as needed.
Fifth, the PBOC, in collaboration with the Ministry of Science and Technology and other nine ministries, will issue the Guiding Opinions on Financial Support for Building Global Sci-Tech Innovation Hubs in Beijing (Beijing-Tianjin-Hebei Region), Shanghai (the Yangtze River Delta Region), and Guangdong-Hong Kong-Macao Greater Bay Area. Developing global sci-tech innovation hubs in the three regions is a major strategy set out by the CPC Central Committee. We will speed up the building of a sci-tech financial service system that is aligned with the core functions and international positioning of these innovation hubs. We will improve the provision of full-lifecycle and diversified financial services, and guide financial institutions to improve their service capabilities. We will strengthen information sharing, mutual recognition of standards and infrastructure connectivity within each region, and make these regions the greater beneficiaries and forerunners in implementing policies such as central bank lending, the sci-tech board in the bond market, and cross-border investment and financing. These efforts are expected to help foster a high-standard sci-tech finance ecosystem.
On top of the above measures, the PBOC established an RMB repo facility in June this year, to support overseas central banks (monetary authorities), international financial organizations and sovereign wealth funds in obtaining RMB liquidity from the PBOC through bond repos. The facility, which is welcomed by the market, can help these institutions better manage RMB liquidity and allocate RMB assets. Given that foreign RMB clearing banks are an important part of the cross-border RMB clearing network, the PBOC intends to give them access to the RMB repo facility, which, we believe, could enable these banks to better play their roles as RMB clearing banks.
Earlier this year, the PBOC adopted a new framework for e-CNY statistics, and the e-CNY was re-positioned as deposits. The E-CNY Center, which was established in Beijing last year, is now in full operation, and provides one-stop e-CNY services ranging from issuance, retail and wholesale business, blockchain technology, to smart contracts. The number of e-CNY operators has increased from 10 to 30, covering all systemically important banks.
Next, I would like to share with you my thoughts on several issues of interest to the market.
The first issue is the transformation and improvement of China’s monetary policy framework.
Studies on the theory and practice of monetary policy have never stopped globally. At the 2024 Lujiazui Forum, I shared some thoughts on the future evolution of China’s monetary policy framework.
In the past two years, we have done a lot of work and made positive progress. We have clarified the 7-day reverse repo rate in OMOs as the policy rate, added overnight operations, and launched government bond trading in the open market. As a result, our monetary policy toolkit has been further diversified, and a clearly market-based interest rate adjustment mechanism has taken shape.
Meanwhile, we have made continued efforts to reinforce interest rate policy implementation and oversight, regulate the pricing of deposits and loans, and improve banks’ pricing ability. We have also optimized structural monetary policy tools, enhanced the synergy with fiscal, industrial and other policies, and put more focus on market communication and expectations guidance.
Given that the transformation of monetary policy framework is a gradual ongoing process, we will continue to review and improve it. From a near- to medium-term perspective, our focus is on further leveraging the role of interest rate adjustment. Here is what we will work on.
First, we will further improve the framework for short-term rate adjustment. With the policy rate playing a more effective role in guiding money market rates and the interest rate corridor improved, the precision and effectiveness of overnight rate adjustment has been improving. The interbank overnight repo rate, known as DR001, is a rate formed through active trading and the market’s most representative benchmark. It can serve as a barometer of short-term funding conditions, and has been quite stable in recent years.
At present, the interbank overnight repo rate has become the de facto target rate in our monetary policy adjustment. However, OMOs and policy rates are predominantly 7 days, creating a maturity mismatch with the target rate. To further enhance the precision of interest rate adjustment, we will look into shifting predominant OMOs from 7 days to overnight when appropriate. By then, the overnight repo rate in OMOs will serve as the primary policy rate.
Second, we will advance the reform of loan pricing benchmarks to transition from the loan prime rate (LPR) as the single benchmark to more diversified benchmarks for loan pricing. Over the past decades, the benchmark lending rate and the LPR have played their roles as loan pricing benchmarks at different stages of China’s development. Recently, under the guidance of the PBOC, some financial institutions have reached agreement with their clients and started using market rates, such as the interbank overnight repo rate, as the pricing benchmark for floating-rate loans. This move has not only been effective in meeting the diverse needs for loan pricing, but also helped improve the efficiency of monetary policy transmission.
With continued improvements in the diversification of loan pricing benchmarks, financially strong enterprises may choose the interbank overnight repo rate or the LPR as the pricing benchmark for floating-rate loans based on negotiations with financial institutions. Meanwhile, the LPR could remain in place as the pricing benchmark for loans to small businesses and individuals. The interbank overnight repo rate can also serve as an alternative benchmark for pricing bonds and financial derivatives. The PBOC will issue policy guidelines for financial institutions in due course. While diversifying loan pricing benchmarks, the PBOC will also reform the LPR quotation mechanism to improve the quality of quotations.
Third, we will phase out benchmark deposit and lending rates. The PBOC set benchmark deposit and lending rates for financial institutions for quite a long time in the past. However, with the progress of market-based interest rate reform, they have been gradually replaced by market-based pricing benchmarks. Now, there are several pricing benchmarks for bank loans, including the LPR and the interbank overnight repo rate. For the pricing of bank deposits, we have published the average interest rates on deposits of different maturities since the first quarter of 2026 as the reference for banks to price deposits. In practice, benchmark deposit and lending rates for financial institutions have remained unchanged since their last adjustment in October 2015. Therefore, they no longer serve as pricing benchmarks for deposits and loans. Their only use is interest calculation in a few judicial cases. Going forward, the PBOC will replace them with market-based interest rates, and phase out benchmark deposit and lending rates.
The second issue is the RMB exchange rate.
The RMB exchange rate, as an important price in the financial market, has been a subject of attention for a lot of people. Ten days ago, the PBOC published its view on the RMB exchange rate, and responded to several issues in a professional and objective manner. Two days ago, I exchanged views on the RMB exchange rate with heads of international organizations, as well as government officials and central bank governors from many jurisdictions during the IMF-World Bank Annual Meetings and the G20 Finance Ministers and Central Bank Governors Meeting in Bangkok, Thailand.
China adopts a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies. The PBOC has phased out regular intervention in the FX market since 2017. In recent years, the RMB exchange rate has experienced several cycles of appreciation and depreciation, with two-way floating and greater flexibility. Under certain circumstances, the PBOC will use macroprudential tools to guide expectations, or even market interventions in extreme cases, to correct herd behavior and the self-reinforcing irrational expectations. Such measures are consistent with international rules and practices.
In fact, today’s global FX market is huge in size. In 2025, the average daily trading volume in the global FX market was close to $10 trillion, and the average daily trading of the RMB exceeded $800 billion, around 80 percent of which took place in the offshore market. No central bank can be expected to affect the underlying trend of exchange rate, and no country can be expected to boost its trade competitiveness through sustained currency devaluation.
China’s trade growth is driven by its growing industrial competitiveness in the global market. It is built on four decades of reform and opening up, supported by a super-large market, a complete industrial chain and infrastructure ecosystem, abundant, high-caliber and diligent labor resources, as well as sustained R&D and innovation capability. As China’s exports move up the value chain, foreign trade firms have seen their bargaining power rise substantially, and a growing number of them now proactively hedge against exchange rate risks and settle in RMB. These changes have rendered China’s trade significantly less sensitive to exchange rate movements, which is an important structural change in recent years. China has no need or intent to gain trade competitive advantages through currency devaluation. China has never resorted to competitive currency devaluation to offset intensive external shocks including the Asian financial crisis, the global financial crisis, and the trade war. Instead, it has made great efforts to prevent the RMB from excessive depreciation.
As an important macroeconomic variable, an exchange rate is driven by a number of factors including economic growth, monetary policy, financial market, geopolitics, and sudden shocks. There is no straightforward relationship between exchange rate and current account. Citing some idiosyncratic international assessment findings as evidence for currency undervaluation or overvaluation is a misinterpretation and misuse of those findings. It reflects a misconception due to insufficient professional understanding of exchange rate.
Addressing global economic imbalances is a shared responsibility of both deficit and surplus countries. In the international monetary system with one dominant sovereign currency, the issuing country of the reserve currency has been running large fiscal and current account deficits for a prolonged period. Attributing one’s persistently high fiscal deficit, declining industrial competitiveness, and complicated structural issues simply to others’ exchange rates is nothing but dodging accountability and shifting the responsibility for adjustment onto others.
China remains committed to the strategic direction and priorities set out in the 15th Five-Year Plan. We will press ahead with the transformation of economic growth model, expand domestic demand, and pursue high-standard opening up, to contribute to the new round of global economic rebalancing.
The third issue is RMB internationalization.
The internationalization of the RMB started in 2009. Driven by market demands, coupled with shifts in the international environment and geopolitical situation, global appetite for the RMB has increased significantly, and the RMB’s international role has continued to grow.
At present, the RMB is the largest settlement currency for China’s external receipts and payments, the world’s second-largest currency in trade finance, and the third-largest payment currency. SWIFT data shows that the RMB accounts for around 3 to 4 percent of international payments, ranking fifth globally. However, it ranks third and its share rises to 6 to 7 percent if we include settlements through the Cross-Border Interbank Payment System (CIPS) and banks’ internal systems, covering both cross-border RMB payments and offshore RMB payments. Currently, the RMB internationalization is expanding swiftly to broader areas such as currency cooperation, investment and financing, and financial market transactions.
Going forward, the PBOC will step up high-quality policy support and foster a more favourable environment for domestic and overseas entities to hold and use the RMB.
First, we will better serve the real economy, and facilitate trade, investment and financing. In recent years, we have introduced a host of policies on integrated RMB and foreign currency management, covering portfolio investment, cross-border financing, and cash pooling, among others. We have improved the easiness of cross-border RMB business and reduced the cost of RMB usage. We support Chinese and foreign financial institutions in providing domestic and overseas business entities with comprehensive RMB financial services, including cross-border settlement, investment, financing, and hedging. Recently, the PBOC has appointed several foreign banks as RMB clearing banks. Going forward, we will continue to improve the RMB clearing bank network and make RMB financial services accessible to more market entities.
Second, we will diversify the supply of high-quality RMB assets and boost the trading of offshore RMB financial products. On the one hand, we will better leverage the role of onshore market as the largest pool of RMB assets. We will improve the Bond Connect, Swap Connect and other connect programs, and advance connectivity between domestic and overseas financial market infrastructures. We will explore a multi-tiered custody arrangement when further opening up the bond market, promote the inclusion of RMB-denominated bonds as eligible collateral by other markets, and create an enabling environment for global investors to invest in RMB bonds. On the other hand, we will continue to support the development of offshore RMB market. We support an offshore RMB market landscape where Hong Kong remains the main hub, while London, Singapore and Dubai hubs develop in tandem. We support Shanghai in building a system of offshore financial services that is aligned with its role as an international financial center. We will continue with the regular issuance of central bank bills in the offshore market, boost trading of RMB-denominated government bonds and central bank bills in the offshore secondary market, encourage market-making by financial institutions, support offshore repos, and develop an RMB yield curve. We will diversify offshore RMB government bond futures, and develop the interest rate swap market to better meet market participants’ needs for hedging interest rate risk. We will also establish a well-functioning comprehensive offshore financial trading platform and provide diverse financial infrastructure services for the offshore market.
Third, we will put in place a stable and multi-layered system for providing RMB liquidity to the offshore market. We will harness the role of bilateral currency swap arrangements, and encourage more counterparties to establish a standing facility that taps into the swap funds. We support the Hong Kong Monetary Authority in providing RMB liquidity with tenors exceeding one year through the RMB Business Facility. We will make good use of the RMB repo facility, and support foreign RMB clearing banks in obtaining RMB liquidity through onshore repos, interbank borrowing, and issuing Interbank Certificates of Deposit. We will diversify our toolkit and offer short-, medium-, and long-term tools, so as to provide readily available and multi-layered RMB liquidity to the offshore market when needed.
The fourth issue is the impact of artificial intelligence (AI) and financial policy response.
In recent years, AI has developed rapidly around the world, with far-reaching impact on productivity, investment, employment, income distribution, and financial stability, among others. Discussions of international organizations and central banks have shed light on several issues that warrant attention.
First, there may be a time lag between the demand-side and supply-side effects of AI. In the short term, AI could improve efficiency for market entities, boost investment, and push up inflation, while in the medium to long term, it could raise overall productivity and reduce inflation.
Second, the impact of AI is uneven across countries, regions, and industries. Although AI has not yet made a noticeable dent in overall employment, it is already reshaping the structure of jobs.
Third, the AI boom has become a major driver of the global equity market rally, and global financial markets are highly correlated and volatile.
Thanks to well-developed infrastructure and human capital advantage, AI has been widely adopted in China, and it is playing an increasingly important role in promoting economic growth. Going forward, the PBOC will focus on the following three priorities.
First, we will closely follow and assess the macroeconomic impact of AI development. The PBOC will carefully assess the impact of AI on the macro economy, financial markets and monetary policy, and will take a forward-looking approach to policy considerations and preparedness.
Second, we will provide financial support for the development of AI industry. The PBOC will further improve policy framework to support financing by AI companies. We will focus on key areas including innovation in core technologies and “AI Plus”, and step up diverse financial support for sci-tech innovation.
Third, we will prudently advance the adoption of AI in the financial sector. AI has already been adopted to identify suspicious transactions, improve risk management efficiency, and enhance financial inclusion, to name just a few. The PBOC, together with relevant authorities, has explored how AI could be adopted in the financial sector from several perspectives, including infrastructure improvement, capacity building, use case expansion, and risk prevention. Based on studies, we issued a policy document on “AI Plus Finance”.
The PBOC will continue to explore the adoption of AI in supporting monetary policy analysis, financial risk identification, as well as financial regulation and services in payment, credit reporting and anti-money laundering, among others. At the same time, we will guide financial institutions to prevent data security and AI model risks.
To conclude, I wish the Forum a complete success. Thank you!