The Shanghai Head Office of the People's Bank of China (“PBC”); all branches and business management departments of the PBC; all central sub-branches of the PBC in capital cities of provinces (autonomous regions) and the central sub-branch of the PBC in Shenzhen; all policy banks, state-owned commercial banks and joint-stock commercial banks; and Postal Savings Bank of China:
For the purposes of further improving the administration of cross-border capital flow and promoting the opening-up of the financial market, you are hereby notified of the relevant matters as follows:
I . Overseas RMB business clearing banks and overseas RMB business participating banks may, within the current policy framework, provide liquidity support for the development of RMB business in the offshore market by conducting such businesses as interbank lending, cross-border account financing, and bond repurchase transactions in the inter-bank bond market. Overseas RMB business clearing banks shall effectively perform the functions of clearing banks, and make complete RMB liquidity management plans and risk response plans.
The PBC shall, jointly with the relevant monetary authorities, implement the existing bilateral home currency exchange agreements in an effective manner so as to further facilitate trade and investment, and maintain the stability of the financial market.
II . From the date of issuance of this Notice, the deposit reserve ratio of RMB deposits of RMB business clearing banks in Hong Kong and Macao in the clearing accounts of the central sub-branch of the PBC in Shenzhen and the central sub-branch of the PBC in Zhuhai shall be adjusted to zero.
III . The fund exchange and remittance mechanism for the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect shall be further improved, and overseas investors' investment in RMB or foreign currency shall be facilitated.
(1) An overseas investor may, through the RMB business clearing bank of a securities company or broker in Hong Kong and an overseas RMB business participating bank in the Hong Kong region which is approved to conduct transactions in the domestic inter-bank foreign exchange market (hereinafter collectively referred to as “HKSCC”), handle the exchange of foreign exchange funds and the hedging of foreign exchange risks, and include them in the RMB purchase and sale business for management.
(2) When conducting RMB purchase and sale business for an overseas investor, HKSCC shall ensure that the relevant overseas investor's fund exchange and foreign exchange risk hedging in this institution are based on the true and reasonable demand under the interconnection mechanism for trading on the mainland and Hong Kong stock markets.
IV . This Decision shall come into force on the date of issuance.