REGULATORS published draft rules yesterday that set total loss-absorbing capacity requirements for systematically important banks.

The rules are aimed at further improving the risk disposal mechanism at Chinese banks and will help the country’s top lenders deal with future risks, the China Banking and Insurance Regulatory Commission said in a statement on its website.

According to the rules, lenders classified as global systematically important banks must meet specific total loss absorbing capacity targets starting in 2025.

Meanwhile, Chinese commercial banks have made rare cuts to their foreign currency deposit rates in recent weeks to reflect the easier monetary policies of overseas economies grappling with the fallout from the coronavirus pandemic.

The move is expected to encourage Chinese companies and households to covert their often large foreign currency holdings to yuan and dampen speculative purchases of foreign currencies, analysts said.

Bank of Communications said Saturday that it was lowering interest rates on deposits below US$3 million in certain foreign currencies.

The one-year U.S. dollar deposit rate at all of China’s biggest five State banks now stands at 0.35 percent which compares with levels of 0.75-0.8 percent previously, according to data from the lenders.

In contrast, the benchmark one-year yuan deposit rate is much higher at 1.5 percent.

Chinese foreign currency deposits stood at US$819.5 billion as of end-August, up US$25.8 billion from the previous month, and marking the highest level since March 2018. But as overseas economies embark on aggressive monetary easing, cutting rates to zero or negative, foreign capital has flowed into China — the only major economy expected to show growth this year.

(SD-Agencies)