PBOC, NFRA, SAFE and Shanghai Municipal People’s Government Jointly Issue the Action Plan for Further Facilitating Cross-Border Financial Services in Shanghai International Financial Center

To thoroughly implement the guidelines of General Secretary Xi Jinping’s important speech during his visit to Shanghai and of the Central Financial Work Conference, deepen institutional opening-up in the financial sector, and strengthen financial support for Chinese enterprises “going global” and the Belt and Road Initiative, recently, the People’s Bank of China (PBOC), the National Financial Regulatory Administration (NFRA), the State Administration of Foreign Exchange (SAFE), and the Shanghai Municipal People’s Government jointly issued the Action Plan for Further Facilitating Cross-Border Financial Services in Shanghai International Financial Center (hereinafter referred to as the Action Plan).

The Action Plan focuses on further leveraging the unique role of the Shanghai International Financial Center in serving the building of a new development paradigm, supporting market participants of all types in engaging in international competition and cooperation in a safer, more convenient, and more efficient manner. The Action Plan outlines 18 key measures across five areas: improving the efficiency of cross-border settlements, optimizing the services of exchange rate risk hedging, enhancing financing services, strengthening insurance coverage, and upgrading comprehensive financial services. These measures are of great significance for accelerating the development of Shanghai as an international financial center.

Moving forward, the PBOC and the Shanghai Municipal People’s Government will collaborate with relevant authorities to implement the measures outlined in the Action Plan. Efforts will be made to further facilitate cross-border investment and financing, continuously enhance the competitiveness and global influence of the Shanghai International Financial Center, and promote high-quality economic development and high-level opening-up.

Annex

People’s Bank of China, National Financial Regulatory Administration, State Administration of Foreign Exchange, Shanghai Municipal People’s Government

Notice on Issuing the Action Plan for Further Facilitating Cross-Border Financial Services in Shanghai International Financial Center

This Action Plan is developed to implement the guiding opinions of General Secretary Xi Jinping during his visit to Shanghai and of the Central Financial Work Conference, further tap into the unique role of the Shanghai International Financial Center in serving China’s new development paradigm, and support market participants of all types to engage in international competition and cooperation in a safer and more expedient and efficient manner.

I. General Requirements

To build a financial system more aligned with an export-oriented economy and enhance the competitiveness and influence of Shanghai as an international financial center in line with the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, by advancing the institutional opening-up of the financial sector and increasing the financial support to enterprises that are expanding globally and to the Belt and Road Initiative.

II. Main Content

(I) Improving Cross-Border Settlement Efficiency to Facilitate Global Treasury Management for Corporates

1. Optimize how foreign exchange services are managed and the related processes. We support banks in implementing the measures governing the offering of foreign exchange services, optimize the service procedures and reengineer their IT systems, and classify enterprises according to their foreign exchange compliance risks and, based on this classification, provide differentiated and streamlined financial services. We support the Shanghai branches of the pilot program banks—Bank of China, China CITIC Bank, China Minsheng Bank, and Citibank (China) Co., Ltd.—in offering services under the new rules, and encourage more Shanghai-based banks to participate in the program. We will establish the procedures for statement submission and review in relation to exemption from liabilities for pilot program banks that have exercised due diligence, which will support banks in submitting statements in regard to suspected violations and enable us to conduct reviews through the China FX Market Self-Disciplinary Mechanism, thereby making appropriate determinations on whether banks have exercised due diligence and ultimately improving the quality and efficiency of cross-border financial services.

2. Improve the global treasury management systems of corporate groups. We will optimize the policies governing integrated RMB and foreign currency cash pooling to facilitate centralized payments and receipts by the pool header on behalf of the overseas member enterprises. Cross-border funds transfers by full-featured cash pools in the China (Shanghai) Pilot Free Trade Zone will also be optimized. We encourage banks to gradually achieve the automated processing of cross-border payments, extend service hours for such services as cross-border cash pooling by key corporate groups, and offer real-time worldwide funds transfers. We will support the Pudong New Area in taking the lead in developing financial, talent-related, and other supportive policies that encourage corporate groups to set up treasury centers, with a view to building a stronger headquarters economy based on those centers, and encourage other regions to emulate, promote, and refine these supportive policies. We encourage corporate groups to establish cash pools in Shanghai to achieve the expedient, efficient, and centralized onshore management of their global cash funds. Lastly, we will support banks in providing cash pooling services that are aligned with the business scale and needs of the enterprises they serve.

3. Expand the functions and applications of free trade accounts. We will support banks in reviewing the authenticity of cross-border transactions using the information they obtain from anti-money laundering, counter-terrorist financing, and anti-tax evasion programs, to offer instant payments and receipts between FT accounts and overseas accounts, and, to facilitate RMB settlement between FT accounts and regular domestic accounts for enterprises recognized as exemplary businesses. We will support banks in developing deposit products for the FT accounts of overseas organizations, and allow market-based pricing for the interest rate on foreign-currency deposits of non-residents, in line with international practices. For banks that are qualified to provide cross-border e-commerce companies with foreign currency purchase and sale services as well as payment and receipt services based on digital transaction information, we will encourage them to develop new applications of FT accounts to provide internationally aligned settlement services to cross-border e-commerce companies. We will also optimize dynamic updating mechanism for the FT account list.

4. Encourage financial institutions to enhance their digital services. We encourage banks to conduct the cross-border authentication and electronic verification of the digital identity of individuals and enterprises, and to steadily expand the coverage of their digital services related to cross-border payments and receipts. We will support financial institutions in optimizing the authenticity check of customers’ electronic documents, information, and materials by leveraging blockchain and other technologies, improve their ability to create accurate customer profiles, and enhance the quality of their cross-border financial services for enterprises that are expanding globally. We will encourage Shanghai-based banks participating in the e-CNY pilot program to engage in mBridge and explore innovative and distinctive application scenarios. We will also support CFETS in providing mBridge with foreign-currency liquidity management and exchange services.

5. Improve the functionality and global coverage of the RMB Cross-Border Interbank Payment System (CIPS). CIPS Co.,Ltd. will enhance collaboration with financial institutions to jointly improve the standard of services offered to enterprises that are expanding globally. We will encourage more banks to join CIPS to expand its network coverage. We will also strengthen CIPS by improving its functionalities and promoting the use of blockchains, so as to provide secure and efficient clearing and settlement services for RMB-denominated international trade, shipping, investment, and financing activities.

(II) Optimizing Exchange Rate Hedging Services and Enhancing the Capacity to Manage and Respond to the Foreign Exchange Risks

6. Develop diversified exchange rate hedging products and services. We will support CFETS in providing trading facilities for foreign exchange from and into RMB within the pilot free-trade zones, and strengthening foreign exchange services in relation to the currencies of Belt and Road countries. We will encourage more enterprises to make use of the CFETS ONE platform, and more banks to directly offer quotes through the platform, thereby facilitating foreign exchange transactions for various enterprises. We also encourage banks to proactively develop corporates as first-time users of exchange rate hedging services, to raise their risk awareness and lower the associated costs. We will support banks in investing more in the development of exchange rate hedging products, expanding the availability of plain vanilla American-style, European-style, and Asian-style options and option combinations for RMB/foreign currency pairs, and diversifying the range of RMB foreign exchange derivatives for the domestic market. We will also support the transformation and upgrading of bank outlets and, encourage capable banks to set up outlets that offer international banking services in line with their regional and functional positioning, to form dedicated foreign ex...