China’s interbank dollar lending sentiment index has climbed to 74, a record high that points to improving dollar liquidity conditions within the country’s banking system. The number arrives during a period of active intervention by the People’s Bank of China, which has been quietly restructuring how dollars flow between the nation’s largest financial institutions.
What the PBOC is actually doing
Around June 11, 2026, the PBOC directed major state-owned banks to limit their net interbank lending. A cash surplus had been building in the system, threatening to push borrowing costs well below the PBOC’s policy rates.
At the same time, at least five Chinese commercial banks raised their dollar deposit rates to levels at or exceeding the US Secured Overnight Financing Rate, which currently sits around 3.61%. Chinese banks are essentially competing for dollar deposits by offering rates that match or beat the US benchmark.
The bigger strategic shift
