China’s Central Bank Plans Joint Liquidity Tool for Nonbank Redemptions

China’s central bank plans a joint liquidity tool for large redemptions at nonbank financial institutions, part of a wider policy package addressing liquidity strains and access to domestic financial markets.

People’s Bank of China Gov. Pan Gongsheng presented the plans at the Financial Street Forum in Beijing on Oct. 19. The bank would establish the tool with the National Financial Regulatory Administration and the China Securities Regulatory Commission (CSRC) for situations involving large redemptions at nonbank institutions.

The central bank also plans to expand eligibility for its Standing Lending Facility and connect China’s interbank and exchange bond markets.

A separate pilot would allow eight Chinese and foreign offshore renminbi clearing banks to trade for their own accounts in the onshore interbank foreign-exchange market. The proposed access is limited to those banks and that type of trading.

The central bank and 10 other agencies have issued guidance on financing international science and technology innovation centers in Beijing (Beijing-Tianjin-Hebei), Shanghai (Yangtze River Delta) and the Guangdong-Hong Kong-Macao Greater Bay Area. The guidance supports patient capital and venture-capital centers in those regions. It also calls for the National Venture Capital Guidance Fund to invest in sub-funds and projects focused on emerging and future industries.

Separately, the CSRC issued an 18-article rule defining securities-transfer violations and their penalties. The regulator also plans four measures to refine penalties for illegal reductions in shareholdings. The rule takes effect Dec. 1.