Foreign Currency Interbank Certificates of Deposit Approved by PBOC


China’s interbank market has just seen the launch of foreign currency certificates of deposit (CD’s) with the approval of the Chinese central bank.

The Market Interest Rate Pricing Self-Disciplinary Mechanism (市场利率定价自律机制) announced on 5 February that starting from that date it would roll out foreign currency interbank CD’s after obtaining approval from the People’s Bank of China (PBOC).

The Mechanism said that the move would help to “further drive the stable development of the interbank CD market and diversify the domestic and foreign currency funding channels of financial institutions.”

First established in September 2013, the Mechanism is an industry body comprised of China’s leading financial institutions that is responsible for conducting self-disciplinary regulation of rates on the Chinese money, credit and financial markets.

Issuers of foreign currency CD’s must be core members, foundational members or observer members of the Mechanism, and have already submitted an annual interbank CD issuance plan to PBOC.

The Notice states that the CD issuance quotas of Chinese financial institutions will encompass both foreign currency interbank CD’s and renminbi interbank CD’s.

According to the Notice each issue of foreign currency interbank CD’s should be no less than 50 million yuan in value, and entities should subscribe for no less than 10 million yuan in CD’s.