<\/p>\n
China\u2019s central bank asked its major lenders to raise the share of yuan when facilitating cross-border trade in its latest push for the use of the currency as the world grapples with the onslaught of tariffs by the US.<\/p>\n
The People\u2019s Bank of China increased the floor ratio for yuan-denominated trade transactions to 40% from 25% as part of its recent adjustment to the so-called Macro Prudential Assessment, according to people familiar with the matter, who asked not to be identified discussing a private matter. While not mandatory, banks missing the ratio often receive a lower score in regulatory review which will impact their future business expansion.<\/p>\n
The sharp increase highlights Beijing\u2019s determination to accelerate the use of the yuan in global trade and may have a significant impact on demand for the currency just as Trump\u2019s sweeping tariffs raised concerns about the international appeal of dollar-based assets.<\/p>\n
The move comes amid negotiations between Beijing and Washington after US President Donald Trump sent shockwaves across the global economy and markets by raising tariffs on China to as high as 145%. After China answered with its own increases, the two sides agreed on a 90-day truce earlier this month.<\/p>\n
China\u2019s imports and exports of goods amounted to RMB43.8 trillion in 2024. The proportion of cross-border yuan payments in goods trade reached 30%, central bank Governor Pan Gongsheng said in January.<\/p>\n
China has been actively advancing the cross-border use of the yuan through various initiatives over the past few months. The authorities vowed to further enhance the facilitation of cross-border financial services in Shanghai last month, including improving cross-border settlement efficiency and optimising exchange rate hedging services.<\/p>\n
Banks can also offer discounted service fees to exporters and importers to stoke their use of the Chinese currency.<\/p>\n
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