The People’s Bank of China signalled a possible shift to an overnight policy rate, outlined wider corporate loan pricing references and announced plans for a liquidity backstop for asset managers facing market-wide stress. It also plans to broaden banks’ access to its standing lending facility.

Separately, China’s bank wealth management market expanded while remaining overwhelmingly concentrated in fixed-income products. Digital renminbi operators presented applications in corporate financing, while ICBC and Standard Bank announced additional renminbi clearing and funding services for Africa.

Read more on the week’s key developments:

1. PBOC to study shift from seven-day to overnight policy rate

PBOC Governor Pan Gongsheng said at the Financial Street Forum in Beijing on 19 October that the central bank would study shifting its predominant open-market operations from seven days to overnight when appropriate. The overnight operation rate would become its primary policy rate. Pan said the interbank overnight repo rate, DR001, already functions as its monetary policy target. This would align policy operations with the market rate the PBOC targets.

Pan also outlined plans to diversify loan pricing benchmarks, allowing financially strong enterprises to choose between the overnight repo rate and the loan prime rate (LPR) for negotiated floating-rate loans. Some institutions already use market-rate benchmarks under PBOC guidance, while the LPR could remain the reference for small businesses and individuals. Wider use of overnight benchmarks could link corporate loan pricing more directly to money-market conditions, increasing the importance of managing interest-rate repricing for banks and borrowers. The one-year and five-year-plus LPRs remained at 3% and 3.5% on 20 October.

2. PBOC plans liquidity backstop to curb bond sell-offs driven by fund redemptions

Pan announced on 19 October that the PBOC, National Financial Regulatory Administration and China Securities Regulatory Commission (CSRC) would establish a contingent liquidity facility for asset managers facing market-wide stress. Eligible institutions would include bank wealth management subsidiaries, public fund managers and their corresponding bank or securities parents. Access would require high-grade collateral and compliance with macroprudential conditions. Operating details will follow in open-market announcements.

The facility targets the cycle in which withdrawals force bond sales, falling prices reduce portfolio values and further redemptions follow. China’s late-2022 bond sell-off exposed this vulnerability, which the IMF subsequently highlighted in its assessment of asset management risks. The proposed facility would provide collateral-backed funding to meet liquidity pressures; investors would continue to bear portfolio losses.

3. China’s bank wealth management market reaches RMB 35.37 trillion

China Merchants Bank’s CMB Wealth Management led bank wealth managers with RMB 2.96 trillion ($443.4 billion) in outstanding products at September-end, followed by China CITIC Bank’s wealth management subsidiary at RMB 2.64 trillion ($395.5 billion). The wealth management subsidiaries of Industrial Bank and China Everbright Bank followed at RMB 2.37 trillion ($355.0 billion) and RMB 2.17 trillion ($325.0 billion). The rankings are based on institution-level data gathered by Securities Times; all four leaders are subsidiaries of joint-stock commercial banks.

The Banking Wealth Management Registration and Custody Centre’s report, released on 21 October, put the overall market at RMB 35.37 trillion ($5.3 trillion), up 10.08% year on year, with fixed-income products still representing 96.61%. Growth was accompanied by a continued shift towards licensed wealth management companies, which accounted for 93.07% of the market, while directly managed bank products contracted. Between end-2025 and September-end 2026, public-fund allocations increased from 5.1% to 7.9% of investment assets, and closed-end products rose from 20.13% to 23.64% of outstanding products.

4. China upgrades digital renminbi infrastructure and smart contract framework

The Digital Renminbi Operations Management Centre unveiled the upgraded central bank-side digital renminbi (e-CNY) system, DCEPS, and a shared smart contract framework at the digital renminbi annual conference in Beijing on 21 October. The system provides payment settlement across institutions and unified liquidity and wallet management. During the conference’s operator presentations, ICBC introduced a smart contract service for settling intercompany debt chains across banks, already implemented in Hunan and elsewhere. Agricultural Bank of China and spirits producer Luzhou Laojiao presented supply-chain financing that directs loan proceeds to actual orders and restricts their subsequent use.

These applications extend e-CNY into corporate settlement and the monitoring of loan use. The upgrade retains e-CNY’s two-tier structure, with 30 authorised operators providing customer services and developing applications on the central infrastructure. Under the framework implemented in January 2026, digital renminbi held in commercial-bank wallets has deposit status and receives deposit insurance protection, while real-name wallet balances earn interest. Cumulative transactions reached approximately RMB 31 trillion ($4.6 trillion) by September-end. September transaction value rose 123% year on year to RMB 1.87 trillion ($280.1 billion), while transaction numbers increased 12%.

5. PBOC to broaden standing lending facility access to foreign banks

Pan announced on 19 October that the PBOC would expand access to its standing lending facility (SLF) to include locally incorporated foreign banks, while clarifying that nationwide banks would receive the same operational arrangements. The facility currently mainly serves city commercial banks and rural financial institutions; the changes aim to extend coverage across domestic deposit-taking financial institutions.

Established in January 2013, the SLF initially served mainly policy banks and nationwide commercial banks, before access expanded to smaller local lenders. It provides collateralised funding at overnight, seven-day and one-month maturities to meet temporary liquidity needs, with its rates forming the upper bound of the PBOC’s interest-rate corridor. The expansion would bring locally incorporated foreign banks into the same short-term funding framework as domestic lenders.

6. CSRC approves 18 active ETFs with combined RMB 36 billion fundraising cap

China’s first 18 actively managed ETFs are scheduled to begin fundraising on 23 October following registration approval announced by CSRC chairman Wu Qing on 19 October. Eighteen managers will each launch one product, with nine intended for the Shanghai Stock Exchange and nine for the Shenzhen Stock Exchange. Individual fundraising caps of RMB 2 billion ($299.6 million) give the batch a combined ceiling of RMB 36 billion ($5.4 billion). Managers include E Fund, China Asset Management, Southern Asset Management and Fullgoal.

The products give active managers another route to compete for investor assets through an exchange-traded structure. Portfolios must hold at least 30 securities, with the ten largest positions accounting for no more than 60% of net assets. Managers must disclose daily creation and redemption lists based on the previous day’s portfolio. That transparency also creates challenges for active strategies: product materials identify potential strategy replication and trading ahead of disclosed positions as risks.

7. PBOC says interbank-exchange bond connection can launch after testing

Pan said connectivity between China’s interbank and exchange bond markets would launch after infrastructure providers and participants complete test runs. The PBOC and CSRC approved infrastructure cooperation in 2020, followed by interim operational measures in 2022. China’s overall bond market held RMB 209 trillion ($31.3 trillion) outstanding in custody at August-end 2026, with RMB 39.2 trillion ($5.9 trillion) in cash-bond turnover during August.

The 2022 interim measures established the framework for cash-bond trading between the two markets. Easier access could reduce operational barriers to cross-market trading, helping investors compare prices and move liquidity between venues. Pan’s latest announcement did not specify a testing timetable or revised operational arrangements.

8. ICBC and Standard Bank plan over RMB 10 billion in financing limits for African banks

ICBC and Standard Bank Group announced ten measures on 19 October covering renminbi payments, clearing and financing in Africa. Plans include wider access to the Cross-Border Interbank Payment System (CIPS), round-the-clock cross-border clearing and more than RMB 10 billion ($1.5 billion) in interbank financing limits. Standard Bank uses CIPS or ICBC’s system for China–Africa transfers, while ICBC’s overseas clearing banks support flows involving Asia and Europe. ICBC also supplies liquidity and acts as prime broker for Standard Bank’s onshore and offshore renminbi FX trading.

The package extends to panda bonds, direct currency conversion, custody and online account opening. Together, these services could help customers fund and manage renminbi transactions as well as execute payments, although the announced financing limits do not indicate amounts drawn. China–Africa goods trade reached approximately $348 billion in 2025, while Ecobank agreed earlier in October to expand CIPS connectivity through its 34-market African network.

9. PBOC proposes proprietary onshore FX trading pilot for eight offshore RMB clearing banks

At the Financial Street Forum in Beijing on 19 October, Pan proposed allowing eight Chinese and foreign renminbi clearing banks operating offshore to trade renminbi for their own account in China’s interbank FX market. The PBOC also intends to admit foreign renminbi clearing banks to its repo facility, established in June for overseas central banks, international financial organisations and sovereign wealth funds.

The proposals address different aspects of clearing banks’ operations: proprietary FX trading would widen their trading options, while access to the PBOC’s repo facility would add a source of renminbi funding. They sit alongside support for clearing banks to obtain renminbi through onshore repos, interbank borrowing and negotiable certificates of deposit. The PBOC had authorised over 40 renminbi clearing banks across 36 countries and regions by June-end 2026; Pan did not identify the eight proposed pilot participants.

10. CSRC plans AI guidance covering securities business and data security

CSRC chairman Wu Qing said at the Financial Street Forum in Beijing on 19 October that the regulator would issue guidance on safe and compliant AI use in securities and futures. The guidance would strengthen regulatory standards for business development and data security, supporting applications in risk management and investment research. Wu also identified opaque algorithms and AI-enabled cyberattacks as emerging risks placing greater demands on financial infrastructure resilience.

Existing programme-trading rules govern automated order generation and submission: securities rules effective since October 2024 require reporting before trading begins, while futures rules effective since October 2025 cover reporting, system testing and risk controls. The planned guidance would address broader AI use within securities and futures firms. China’s national interim rules for generative AI services apply to services offered to the domestic public; internal uses outside those particular rules remain subject to other applicable requirements.