On May 9 and May 16, the Shenzhen branch and Beijing branch of the State Administration of Foreign Exchange Control (SAFE) respectively issued the Regulations on the Centralized Operation of Multinationals' Cross-border Funds in Domestic and Foreign Currency (Pilot) and invited public comment. This represents the third cash pooling pilot program in China.

Since the promulgation of the Rules to Further Promote the Integrated Use of Cross-Border Funds by Multinationals in March 2021, cash pooling pilot programs in China have proven their effectiveness over the past two years. Therefore, the People's Bank of China and SAFE launched another pilot program in Beijing, Guangdong and Shenzhen, which improved the policy of managing the centralized operation of cross-border funds in domestic and foreign currencies based on the first two batches of pilot programs.

The updated pilot program has some innovations from the previous one. Taking the pilot sites of Hainan and Guangdong as examples, there are some differences:

1. Expansion of the scope of registered subjects

2. Lower eligibility criteria for enterprises

3. Lower qualification requirements for partner banks

4. Different limits for external debt

5. Different limits for offshore loans


This pilot program update, on one hand, streamlines the integration of existing regulatory requirements related to program, on one hand, optimizes the integration of existing regulatory requirements regarding the centralized operation of cross-border funds for multinational corporations, benefiting Chinese banks in providing related services to multinational corporations. On the other hand, the update also presents greater challenges for banks to ensure that cross-border capital flows remain compliant with the law.

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