China Moves to Boost the Use of Yuan Globally

Chinese authorities rolled out more measures to promote the use of the yuan globally, their latest effort to build more resilient financial infrastructure to shield its economy from external shocks.

Pan Gongsheng, head of the People's Bank of China, announced Wednesday that Beijing will set up a new repo facility. This facility will let foreign monetary authorities, including sovereign wealth funds, obtain yuan liquidity from the Chinese central bank with bonds as collateral.

He also revealed that China will launch a pilot program for offshore yuan foreign exchange trading in the Shanghai Free Trade Zone, as he spoke to financial executives at Shanghai's Lujiazui forum on Wednesday. This program is aimed at turning the coastal city into a global hub for yuan-denominated asset allocation and risk management.

Speaking about the central bank's control of Chinese monetary policy, Pan said the PBOC will take several steps to improve its mechanism for regulating short-term interest rates.

The PBOC will narrow the rate corridor for its temporary overnight repo and reverse repo facilities, and increase its overnight reverse repo operations, he said.

Taken together, the moves suggest authorities might be pivoting toward using central bank's overnight rate as their main policy benchmark, in line with most of its global peers. The PBOC's main policy benchmark is currently the seven-day reverse repo rate.

Pan also said the bank is formulating tools to provide emergency liquidity to non-bank institutions during a crisis.

Wednesday's speech didn't hint at any potential easing of policy, though it came after lackluster economic indicators released Tuesday. May saw the first decline in Chinese consumer spending in more than three years and a further fall in investment spending.

Despite domestic headwinds, economists believe Beijing is unlikely to abandon its wait-and-see policy approach in the near term, largely because export growth remains robust. But if the weakness continues into the second half of the year or geopolitical risks intensify, policymakers could jump into action, economists say.

Write to Singapore Editors at singaporeeditors@dowjones.com

(END) Dow Jones Newswires

June 17, 2026 00:35 ET (04:35 GMT)