Pan Gongsheng: Promoting interbank and exchange bond market connectivity and implementing withdrawal from deposit and loan benchmark interest rates
The Zhitong Finance App learned that Pan Gongsheng, Governor of the People's Bank of China, mentioned at the 2026 Financial Street Forum annual meeting to promote interbank and exchange bond market connectivity. The interconnection between financial market infrastructure can facilitate the issuance and trading of bonds across markets, promote increased market liquidity and price formation, and better play the role of financial market price discovery and resource allocation. Earlier, the People's Bank of China and the China Securities Regulatory Commission carried out a series of tasks. Currently, connectivity is ready for implementation, and it can be launched after bond market infrastructure operators and market participants have carried out tests.
Also, withdraw from the base interest rate for deposits and loans. Pan Gongsheng pointed out that for a long time in the past, the central bank directly stipulated the benchmark interest rate for deposits and loans of financial institutions. As the market-based reform of interest rates progressed, the benchmark interest rate for deposits and loans was gradually replaced by a market-based pricing benchmark. Bank loan interest rates already have multiple pricing benchmarks, such as loan market quoted interest rates and bank overnight repurchase interest rates; starting in the first quarter of this year, we have announced the average interest rate on deposits for each term as a reference for bank deposit pricing. The benchmark interest rate for deposits and loans of financial institutions has not been adjusted for a long time since October 2015. In fact, it no longer plays a role in deposit and loan pricing. Currently, there are only a few judicial fields left as a basis for calculating interest. In the next step, the People's Bank of China will push to replace interest accrual bases in these fields with market-based interest rate indicators to achieve the benchmark interest rate for withdrawing from financial institution deposits and loans.
The original text is as follows:
People's Bank of China Governor Pan Gongsheng's keynote speech at the 2026 Financial Street Forum Annual Meeting
“Thoughts on Some Current Market Concerns”
Dear Secretary Yin Li, Mayor Yin Yong, and distinguished guests from home and abroad:
Hello everyone! First, I would like to thank the Beijing Municipal Committee and Municipal Government, particularly Secretary Yin, Mayor Yin, and all sectors of society for their continued concern and support for the work of the People's Bank of China.
The Financial Street Forum has extensive international influence and market communication power, and is an important platform for communication between the central bank and the market. Taking this opportunity, I will first report on a few upcoming policy initiatives by the People's Bank of China.
First, it will work with the General Financial Supervisory Authority and the China Securities Regulatory Commission to establish liquidity support tools to deal with large redemptions by non-bank institutions. Earlier, the People's Bank of China had many conversations with the market about this tool. The purpose of this tool is to establish a mechanism to stabilize the bond market, and it forms a new tool for macroprudential management by the People's Bank of China. The tool comprehensively balances the systemic risks and moral risks of the financial market system and is used when asset management institutions face mass liquidity risks and a negative redemption-sell-off cycle occurs in the bond market; operations with central banks must meet macroprudential requirements, provide high-grade collateral, prevent distortions in financial market pricing, create the illusion of undermining, and maintain market discipline. Institutions applicable to the tool include bank financial management subsidiaries, public fund managers, and corresponding bank parent banks, securities parent companies, etc. We will clarify the elements related to the operation of the tool in the open market business announcement.
The second is to expand the scope of institutions applicable to the Standing Loan Facility (SLF). Currently, the Standing Loan Facility is mainly an open market operation tool for the central bank to provide collateral financing for urban commercial banks and rural financial institutions. The period is overnight, 7 days, and 1 month, mainly to meet temporary liquidity requirements. On this basis, we will further incorporate domestic and foreign corporate banks, and at the same time make it clear that national banks will apply the same operating arrangements to achieve full coverage of domestic deposit-type financial institutions. After domestic and foreign corporate banks were included, they also received liquidity support channels from the central bank, which helped them develop their business better.
The third is to promote interbank and exchange bond market connectivity and implementation. The interconnection between financial market infrastructure can facilitate the issuance and trading of bonds across markets, promote increased market liquidity and price formation, and better play the role of financial market price discovery and resource allocation. Earlier, the People's Bank of China and the China Securities Regulatory Commission carried out a series of tasks. Currently, connectivity is ready for implementation, and it can be launched after bond market infrastructure operators and market participants have carried out tests.
Fourth, the pilot will further facilitate overseas financial institutions to carry out RMB purchase and sale business in the domestic foreign exchange market. In recent years, the international use of RMB has increased, and overseas financial institutions' demand for RMB liquidity management has increased. The People's Bank of China plans to allow eight Chinese and foreign RMB overseas clearing banks to carry out proprietary transactions in the domestic interbank foreign exchange market in accordance with international financial market practices and trading practices, facilitate the deeper participation of overseas institutions in the domestic foreign exchange market, and promote the integrated development of onshore and offshore markets. In the future, it will also further increase the openness of the foreign exchange market based on the pilot situation.
Fifth, together with 10 departments including the Ministry of Science and Technology, the “Guiding Opinions on Financial Support for the Construction of International Science and Technology Innovation Centers in Beijing (Beijing-Tianjin-Hebei), Shanghai (Yangtze River Delta), and the Guangdong-Hong Kong-Macao Greater Bay Area” was issued. The construction of international science and technology innovation centers in the Beijing-Tianjin-Hebei, Yangtze River Delta, and Guangdong-Hong Kong-Macao Greater Bay Area is a major strategy of the central government. We will accelerate the construction of a technology finance service system compatible with the core functions and international positioning of international science and technology innovation centers, raise the level of full-chain and diversified financial supply, guide financial institutions to enhance professional service capabilities, strengthen information sharing, mutual recognition of standards and facility connectivity within the region, and promote policies such as refinancing, “technology boards” in the bond market, and cross-border investment and financing in relevant regions to help build a high-level technology finance ecosystem.
Furthermore, in June of this year, the People's Bank of China established an overseas central bank repurchase tool to support overseas central banks or monetary authorities, international financial organizations, and sovereign wealth funds to obtain RMB liquidity from the People's Bank of China through bond repurchases to facilitate its RMB liquidity management and RMB asset allocation, which has received widespread attention and welcome. Foreign RMB clearing banks are an important part of the RMB cross-border clearing network. The People's Bank of China plans to include them as support targets in the tool, which will help foreign clearing banks to better serve overseas RMB business.
At the beginning of this year, the People's Bank of China smoothly switched the digital yuan measurement framework to a new digital yuan measurement framework, and the digital yuan positioning switched from cash to deposit currency. The digital yuan operation and management center set up in Beijing last year has been fully put into operation, and has become a comprehensive digital yuan business platform integrating distribution management, retail, wholesale, blockchain, smart contracts and other services. The number of digital yuan business operators has expanded from 10 to 30, covering all systemically important banks.
Next, I'll share with you some thoughts on some of the issues that the market is paying close attention to recently.
The first question concerns the transformation and improvement of China's monetary policy framework.
From a global perspective, exploration of monetary policy theory and practice is constantly evolving dynamically. At the 2024 Lujiazui Forum, I reported some thoughts on the future evolution of China's monetary policy framework.
Over the past two years, we have done quite a bit of work and made positive progress. We have clarified the policy interest rate status of the 7-day reverse repurchase operation interest rate in the open market, increased the variety of overnight operations, traded treasury bonds in the open market, further enriched the monetary policy toolbox, and made the market-based interest rate regulation mechanism more clear.
At the same time, we are continuously strengthening the implementation and supervision of interest rate policies, standardizing deposit and loan pricing behavior, improving bank pricing capabilities, optimizing the structure and elements of structural monetary policy tools, strengthening collaboration with fiscal and industrial policies, and paying more attention to market communication and guidance of expectations.
The transformation of the monetary policy framework is a gradual and continuous process, and we will continue to evaluate and improve it in the future. Looking at the near medium term, the key direction is to give more play to the role of interest rate regulation, mainly in the following aspects:
The first is to further optimize the short-term interest rate regulation mechanism. With the increase in the role of policy interest rates in guiding interest rates in the money market and the improvement of interest rate corridors, the accuracy and effectiveness of monetary policy regulation of overnight interest rates has gradually increased. Bank overnight repurchase interest rates, commonly known as DR001, are active in money market transactions and the most benchmark interest rate. They can sensitively reflect short-term capital supply and demand conditions, and have also become more stable in recent years.
Judging from the current situation, the bank's overnight repurchase rate has actually become the target interest rate for the central bank's monetary policy regulation; however, at the same time, the central bank's open market operation period is still 7 days, and the two are not completely consistent. In order to further improve the accuracy of interest rate regulation, we will explore opportunities to switch the central bank's open market operating period to overnight, and the open market overnight repurchase interest rate will accordingly become the main policy interest rate.
The second is to promote the reform of loan interest rate pricing benchmarks, shifting from a relatively single reference to the loan market quoted interest rate (LPR) pricing to a more diverse pricing benchmark. Over the past few decades, loan benchmark interest rates, loan market quoted interest rates, etc. have played a good role as loan pricing benchmarks in our country at different times. Recently, under the guidance of the People's Bank of China, some financial institutions have agreed with customers to introduce market interest rates such as bank overnight repurchase rates as pricing benchmarks for floating interest rate loans, which better meets the diversified loan pricing needs of the market and is also conducive to improving the transmission efficiency of monetary policy.
In the future, as diversified loan pricing benchmarks continue to be improved, some enterprises with strong financial capabilities can independently choose the bank overnight repurchase rate or loan market quoted interest rate as the pricing benchmark for floating interest loans after negotiations with financial institutions, and the loan market quoted interest rate can continue to play a role as a pricing benchmark for small businesses and personal loans. The pricing benchmark for bonds and financial derivatives can also consider bank overnight repurchase rates as an option. The People's Bank of China will take the opportunity to issue policy guidelines to guide financial institutions to do relevant work. At the same time, it will also continue to reform and improve the quoting mechanism for quoted interest rates in the loan market to improve the quality of quotations.
The third is to withdraw from the benchmark interest rate for deposits and loans. For a long time in the past, the central bank directly stipulated the benchmark interest rate for deposits and loans of financial institutions. As the market-based reform of interest rates progressed, the benchmark interest rate for deposits and loans was gradually replaced by a market-based pricing benchmark. Bank loan interest rates already have multiple pricing benchmarks, such as loan market quoted interest rates and bank overnight repurchase interest rates; starting in the first quarter of this year, we have announced the average interest rate on deposits for each term as a reference for bank deposit pricing. The benchmark interest rate for deposits and loans of financial institutions has not been adjusted for a long time since October 2015. In fact, it no longer plays a role in deposit and loan pricing. Currently, there are only a few judicial fields left as a basis for calculating interest. In the next step, the People's Bank of China will push to replace interest accrual bases in these fields with market-based interest rate indicators to achieve the benchmark interest rate for withdrawing from financial institution deposits and loans.
The second question concerns the RMB exchange rate.
As an important price in the financial market, the RMB exchange rate is currently being paid a lot of attention at home and abroad. Ten days ago, the People's Bank of China issued an important document: its policy position on the RMB exchange rate, which responded professionally and objectively to some domestic and foreign concerns. Two days ago, while attending the International Monetary Fund/World Bank Annual Meeting and the G20 Finance Ministers and Central Bank Governors Meeting in Bangkok, Thailand, I also discussed this issue with heads of various international organizations, government officials, and central bank governors.
China implements a managed floating exchange rate system based on market supply and demand, adjusted with reference to a basket of currencies. After 2017, the People's Bank of China withdrew from normalized foreign exchange market intervention. In recent years, the RMB exchange rate has experienced multiple cycles of appreciation and depreciation, fluctuating in both directions and increasing elasticity. Under specific scenarios, the People's Bank of China uses macroprudential management tools, and even directly intervenes in foreign exchange in extreme situations to correct the “flock effect” of the market and the self-strengthening of irrational expectations. These measures are in line with international rules and international practice.
In fact, the global foreign exchange market has a huge trading volume, averaging nearly 10 trillion US dollars per day in 2025; the average daily trading volume of RMB foreign exchange exceeds 800 billion US dollars, and about 80% of transactions are offshore. It is difficult for central banks to continue to influence medium- to long-term exchange rate trends, let alone continue to enhance trade competitiveness in this way.
China's trade development is rooted in the improvement of the international competitiveness of the industry. Thanks to China's reform and opening up over the past 40 years, the large-scale market, complete industrial chain and infrastructure system, abundant, high-quality, and hardworking labor resources, and continuous research and innovation capabilities. As China's exports upgrade to the middle and high-end, the bargaining power of foreign trade enterprises has increased dramatically, and they are increasingly using exchange rate hedging tools and RMB settlements. One important change in China's trade in recent years is a marked decrease in sensitivity to exchange rate changes. China has no need or intention to gain a competitive advantage in trade through depreciation of the exchange rate. Amid many rounds of intense external shocks such as the Asian financial crisis, the international financial crisis, and trade wars initiated by the countries concerned, China has never engaged in competitive devaluation, but has taken effective measures to prevent the RMB exchange rate from being overadjusted in the direction of depreciation.
As an important macroeconomic variable, the exchange rate is affected by multiple factors such as economic growth, monetary policy, financial markets, geopolitics, and unexpected risk events, and there is no simple linear relationship with the current account. Using individual international assessment findings as the basis for underestimating or overestimating a country's exchange rate is a misinterpretation and misuse of the assessment results, and there is a lack of necessary professional understanding of exchange rate issues.
Addressing global economic imbalances is a shared responsibility of deficit countries and surplus countries. In an international monetary system dominated by a single sovereign currency, major reserve currency issuers have long had large fiscal deficits and current account deficits. Simply attributing the country's long-term high fiscal deficit, declining industrial competitiveness, and complex structural problems to other countries' exchange rates is a prevarication and avoidance of responsibility for one's own adjustments.
China has steadfastly implemented the strategic direction and key initiatives set out in the “Fifteenth Five-Year Plan”, insisted on promoting the transformation of the mode of economic growth, expanding domestic demand and a high level of opening-up to the outside world, and contributing to a new round of global economic dynamics.
The third question concerns the internationalization of the RMB.
The internationalization of the RMB officially began in 2009. Driven by market demand, combined with changes in the current international environment and geopolitical situation, the international market's demand for the use of RMB has increased markedly, and the level of RMB internationalization continues to rise.
At present, the RMB has become the largest settlement currency for China's external payments, the second largest trade finance currency in the world, and the third largest payment currency. Although according to SWIFT statistics, RMB accounts for around 3-4% of international payments, ranking fifth in the world. However, considering RMB cross-border payments and overseas offshore payments, after including the amount settled through the RMB Cross-border Payment System (CIPS) and the bank's internal system, the share of RMB in international payments currently fluctuates between 6-7%, steadily ranking third in the world. The international use of RMB is also rapidly spreading to a wide range of fields such as monetary cooperation, investment and financing, and financial market transactions.
In the next step, the People's Bank of China will further enhance the supply of high-quality policies and create a better environment for domestic and foreign entities to hold and use RMB.
The first is to better serve the real economy and facilitate trade investment and financing. In recent years, we have successively introduced a series of local and foreign currency integration policies, covering securities investment, cross-border financing, capital pooling, etc., to improve the convenience of handling cross-border RMB business and reduce the cost of using RMB. Support Chinese and foreign financial institutions to provide comprehensive RMB financial services such as cross-border settlement, investment and financing, and hedging to domestic and foreign business entities. Recently, the People's Bank of China authorized a number of foreign banks to act as clearing banks. The next step is to continue improving the RMB clearing bank network so that RMB financial services can reach more operators.
The second is to enrich the global supply of high-quality RMB assets and activate offshore RMB financial product transactions. On the one hand, make better use of the onshore financial market as the largest RMB asset pool. Continue to optimize interconnection mechanism arrangements such as “bond links” and “swaps” to promote infrastructure connectivity in domestic and foreign financial markets. Research the implementation of multi-level escrow arrangements in opening up the bond market to the outside world, promote RMB bonds to become qualified global collateral, and facilitate global investors to invest and allocate RMB bonds.
On the other hand, it continues to support the development of the offshore RMB market. Support the formation of an offshore RMB market structure with Hong Kong as the main focus and collaborative development between London, Singapore, and Dubai. Support Shanghai to establish an offshore financial business system compatible with international financial centers. Continue to normalize the issuance of central bank notes in the offshore market. Increase trading activity in the secondary market for offshore RMB treasury bonds and central bank notes, encourage financial institutions to market, support the development of offshore repurchase services, and cultivate the RMB yield curve. Enrich the variety of offshore RMB treasury bond futures, develop the interest rate swap market, and better meet the interest rate risk hedging needs of market players. Build a comprehensive offshore financial trading platform and enrich offshore financial infrastructure services.
The third is to provide a stable, multi-level RMB liquidity supply to the offshore market. Play the role of good currency swap arrangements, push more exchange counterparties to establish a mechanism for the normalization of the use of swap funds in the local market, and support the Hong Kong Monetary Authority to provide medium- to long-term liquidity for at least 1 year through RMB funding arrangements. Make good use of repurchase tools from overseas central banks and support foreign clearing banks to obtain RMB liquidity through onshore repurchases, lending, and issuing interbank deposits. Continue to enrich the toolbox, covering the short, medium and long term, and providing stable and multi-level RMB liquidity support to the offshore market.
The fourth question concerns the impact of artificial intelligence and financial policy responses.
In recent years, global artificial intelligence has developed rapidly, which has had a profound impact on productivity, investment, employment, income distribution, and financial stability. Judging from current discussions among international organizations and central banks, some issues are worth paying attention to:
First, there may be a time difference between demand and supply effects generated by artificial intelligence. In the short term, it will change micro efficiency, drive investment, and boost inflation. In the medium to long term, it can increase overall productivity and reduce the level of inflation.
Second, the impact of artificial intelligence on different countries, regions, and industries is uneven. Although there has been no significant impact on the total number of jobs, it has begun to affect the employment structure.
Third, the artificial intelligence boom has become one of the main drivers for the rise in global stock markets, and the global financial market is highly correlated and highly volatile.
Benefiting from the country's perfect infrastructure and talent advantages, artificial intelligence in China has been widely used and is playing an increasingly important role in promoting economic growth. From the perspective of the People's Bank of China, the next step is to focus on three areas of work.
The first is to closely follow and determine the macro-impact of the development of artificial intelligence. Carefully evaluate the impact of the evolution of artificial intelligence technology on macroeconomics, financial markets, monetary policy, etc., and make forward-looking policy considerations and preparations.
The second is to do a good job of financial support for the development of the artificial intelligence industry. Further improve the financing support system for artificial intelligence enterprises, focus on key areas such as core technological innovation and “artificial intelligence +”, and enhance the level of financial support for technological innovation and diversification.
The third is to steadily promote the application of artificial intelligence in the financial field. Artificial intelligence has already been applied in many financial fields, such as identifying suspicious transactions, enhancing risk control efficiency, and improving financial inclusiveness. Earlier, the People's Bank of China, together with relevant departments, studied working ideas and directions to promote the application of artificial intelligence in the financial field in terms of improving infrastructure, improving application capabilities, expanding application scenarios, and preventing and controlling security risks, and formulated and issued relevant policy documents on “artificial intelligence+finance.”
We will continue to explore the application of artificial intelligence to assist in carrying out monetary policy situation analysis, financial risk identification, payment, credit reporting, and anti-money laundering supervision services; at the same time, we will guide financial institutions to prevent risks such as data security and model application.
Finally, I wish this forum every success, thank you all!
This article was selected from the “People's Bank of China” official account, Zhitong Finance Editor: Liu Jiayin.