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.
