USD/CNY: Policy tweaks support cross-border lending – BNY

BNY’s Bob Savage highlights that Chinese authorities have raised overseas loan leverage ratios and macroprudential parameters to facilitate outbound and cross-border financing. These measures aim to support investment and stabilize funding conditions, with modest CNY strength and lower China Government Bond yields. The policy stance underscores Beijing’s focus on credit channels rather than headline rate cuts.

China boosts banks’ external lending capacity

"The People’s Bank of China and the State Administration of Foreign Exchange have issued a notice adjusting overseas lending policies for banking institutions."

"The overseas loan leverage ratio for domestic foreign-owned banks, joint ventures and foreign bank branches in mainland China, including those from Hong Kong, Macau and Taiwan, was raised from 0.5 to 1.5."

"The Export-Import Bank’s ratio increased from 3 to 3.5."

"Note that in 2025, China raised its macroprudential adjustment parameter, a multiplier that decides the upper limit of outstanding cross-border financing available to an institution, from 1.5 to 1.75 to facilitate cross-border financing."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)