China’s central bank plans liquidity support mechanism for non-banks — ECNS
The People’s Bank of China plans to create a liquidity support mechanism for non-bank financial institutions in the event of large-scale withdrawals. Pan Gongsheng, governor of the central bank, said this at the opening of the annual Financial Street Forum 2026 conference in Beijing, ECNS reports.
The new macroprudential regulatory instrument is planned to be introduced to stabilize the bond market. It could be activated under certain conditions when asset managers face a major liquidity shortage and a negative cycle of redemptions and forced sales emerges in the bond market. Bank asset management subsidiaries, mutual fund managers, as well as their parent banks or securities trading companies, will be able to use the mechanism.
Measures for the capital market
Wu Qing, chairman of the China Securities Regulatory Commission, said that capital market stability remains a priority amid interconnected volatility in global stock, bond and currency markets. The regulator intends to improve mechanisms for the long-term performance assessment of institutional investors, expand channels for medium- and long-term capital inflows, and deepen mutual fund reform.
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On Monday, the regulator approved the registration of the country’s first group of 18 actively managed exchange-traded funds. Companies whose shares are listed on exchanges will be encouraged to repurchase their own shares more actively, while major shareholders will be encouraged to increase their purchases. Wu Qing also called for increased vigilance regarding overseas leveraged products linked to individual A-shares.
Opening of the financial sector
The central bank also plans to extend access to the standing lending facility to all domestic deposit-taking institutions, including foreign banks registered in China. This instrument provides secured funding for temporary liquidity needs.
In addition, the People’s Bank of China is preparing a pilot project that will allow foreign financial institutions to participate in yuan trading on the country’s interbank foreign exchange market. Access to the yuan repo facility is planned to be expanded for foreign-funded banks that conduct settlements in the Chinese currency. Zhu Hexin, head of the State Administration of Foreign Exchange, also announced a package of foreign exchange reforms to simplify cross-border investment and corporate financing.
