The draft for soliciting opinions issued by the People’s Bank of China and the State Administration of Foreign Exchange on April 1, 2025 proposes that it is planned to promote the pilot program of integrated domestic and foreign currency fund pool business across the country to facilitate the coordinated use of cross-border funds of multinational companies and enterprises.
Chinese authorities are mulling the nationwide expansion of a pilot cash-pooling program that integrates domestic and foreign currency management to facilitate the coordinated use of cross-border funds by multinational enterprises, according to a draft regulation released by the People’s Bank of China and the State Administration of Foreign Exchange on April 1, 2025 to solicit public opinion.
The picture shows the People’s Bank of China. (Photo source: Xinhua News Agency)
【Knowledge Points】
In order to steadily promote the pilot of integrated fund pools in domestic and foreign currencies, better facilitate the coordinated use of cross-border funds in enterprises, and give full play to the role of cross-border business in serving the real economy and promoting trade and investment facilitation, the People’s Bank of China and the State Administration of Foreign Exchange jointly drafted the “Notice on Issuing the “Regulations on Issuing the Business Management of the Fund Pools in the Domestic and Foreign Currencies of Multinational Companies” (Draft for Comments)” (hereinafter referred to as the “Notice”), and solicited public opinions from the public. It is planned to promote the relatively mature pilot policy of integrated fund pools in the early stage to the whole country.
It is reported that in order to facilitate multinational corporations to utilize two domestic and foreign markets and two resources, the People’s Bank of China and the State Administration of Foreign Exchange issued relevant policies on the cross-border fund pool business of RMB and foreign exchange respectively. Since 2021, in order to better support enterprises to make good use of the fund pool policy, the People’s Bank of China and the State Administration of Foreign Exchange have actively explored the fund pool policy merger plan and promoted the pilot program of the integrated fund pool of domestic and foreign currencies in the high and low versions of the domestic and foreign currencies. Among them, the higher version of the fund pool mainly serves large multinational companies, characterized by high threshold, high capital transfer quota and high convenience. In March 2021, five large multinational companies with higher credit ratings were selected in Beijing and Shenzhen for pilot projects, and in 2022 it was upgraded and expanded to 8+ “2” regions, including Shanghai, Beijing, Jiangsu, Zhejiang, Guangdong, Hainan, Shaanxi, Ningbo, Qingdao and Shenzhen. In December 2024, the pilot policies will be further upgraded in the above 10 provinces and cities in accordance with the idea of ”iteration and upgrading, tiered promotion”.
The “Notice” plans to promote the relatively mature pilot policy of domestic and foreign currency integrated fund pools across the country, including: First, establish a policy framework for domestic and foreign currency integrated fund pools. In response to the current problems of many versions of fund pools and the management of separate domestic and foreign currencies, the “Notice” includes the domestic and foreign currency fund pool business in the unified policy framework to further facilitate the transfer and use of funds, and at the same time encourages the development of fund pool business in local currency. In terms of operation, the branches of the foreign exchange bureaus in various places will “one window” to the outside world, and will uniformly accept enterprise registration, change applications, etc., to reduce the “foot cost” of enterprises. Second, implement macro-prudent management of related cross-border capital flows. In terms of cross-border capital flow management, the “Notice” sets up centralized management formulas for foreign debt and overseas loans based on the rights and interests of member enterprises of the fund pool, and implements two-way macro-prudential management of cross-border capital flows related to the fund pool. If necessary, countercyclical management of cross-border capital flows can be achieved by adjusting relevant parameters. The third is to improve management and strengthen supervision during and after the event. The “Notice” clearly defines the specific processing requirements and data reporting obligations for higher-version fund pool business. Local People’s Bank of China and the branch of the State Administration of Foreign Exchange will strengthen statistical monitoring, strengthen risk assessment, carry out non-site verification and on-site inspections, and effectively prevent cross-border capital flow risks.
【Important Speech】
We must expand opening up to the outside world, improve my country’s financial resource allocation efficiency and ability, enhance international competitiveness and the influence of rules, and grasp the rhythm and intensity steadily and prudently.
By boosting opening-up, China will work to enhance the efficiency and capability of financial resource allocation, improve global competitiveness and rule-making influence, and maintain a steady and prudent rhythm and intensity.
——On January 16, 2024, Xi Jinping’s important speech at the opening ceremony of the special seminar on promoting high-quality financial development for provincial and ministerial-level leading cadres
【Related Words】
Two-way macro-prudential management
two-way macro-prudential management
Coordinated use of cross-border funds
coordinated use of cross-border funds
China Daily Network English Dots and Tianjin Studio (this article was first published on the “Study Strong Country” learning platform)
(Reprinting is not allowed without authorization)
[Editor in charge: Chen Danni]
