The People’s Bank of China (PBOC) and the Bank for International Settlements (BIS) signed the accession agreement-Renminbi Liquidity Arrangement (RMBLA) on June 25, 2022. The RMBLA, a financial arrangement initiated and developed by the BIS, aims to provide liquidity support through a reserve pooling scheme and can be utilised by participating central banks during future periods of market volatility. The PBOC was actively involved in the design of the RMBLA. The other initial participants includes Bank Indonesia, Bank Negara Malaysia, the Hong Kong Monetary Authority, the Monetary Authority of Singapore and the Central Bank of Chile.

Each participating central bank contributes a minimum of RMB 15 billion or US dollar equivalent, in RMB or USD, placed with the BIS, creating a reserve pool. When in need of liquidity, participating central banks would not only be able to draw down on their contributions, but would also gain access to additional funding through a collateralised liquidity window.

The PBOC’s participation in the RMBLA would help strengthen cooperation with the BIS, satisfy reasonable demand for renminbi, and make active contributions to strengthening regional financial safety net.