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China Hits Bump on Road to an Internationalized Yuan

People's Bank of China announces reserve requirement for lenders in offshore trading hubs.

By Bloomberg News | Updated on January 20, 2016

China’s latest measures to shore up its currency and plug an outflow of capital risk setting back the long-held goal for an internationalized yuan.

The People’s Bank of China said Monday that lenders in offshore yuan-trading centers will now have to lock away a share of deposits in its accounts, ending the exemption for foreign institutions in a push to curb speculation against the currency. That followed large-scale intervention in Hong Kong last week that sent yuan borrowing rates in the city soaring to a record as liquidity was temporarily crunched.

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