PBOC Unveils Rules for Large-Value Certificates of Deposit
The People’s Bank of China (PBOC) on June 12 released a comprehensive draft regulatory framework for large-value certificates of deposit (CDs), marking the most significant overhaul of the market since the instruments were introduced in 2015. The proposed “Large-Value Certificate of Deposit Management Measures” aim to strengthen oversight of a rapidly growing segment of China’s banking sector that now plays a critical role in bank liquidity management.
Background and Rationale
The 24-article draft, published for public consultation until July 12, replaces the 2015 Interim Measures and the 2016 PBOC Announcement No. 13. According to the PBOC via Xinhua News, the existing framework “can no longer fully adapt to the current or future market development and management needs, new tasks, and new requirements.”
The move comes as China’s large-value CD market has expanded substantially over the past decade, with these instruments becoming an increasingly important component of bank deposit composition. The regulatory update also coincides with a historically large wave of maturing time deposits in 2026, estimated at approximately 76-77 trillion RMB, according to research from Guotai Haitong Securities cited in Time Weekly.
Key Provisions of the Draft
The draft formalizes several existing practices while introducing new elements designed to modernize the market. The individual investor minimum investment threshold of 200,000 RMB, previously established through a 2016 announcement, is now codified into primary regulation. The institutional minimum remains at 10 million RMB.
A significant change is the explicit authorization of third-party platforms alongside banks’ own channels for CD issuance, trading, transfers, and early redemptions. As reported by Jiemian News, the draft also mandates that the Shanghai Clearing House provide registration, custody, settlement, and payment services for CDs issued through third-party platforms.
The draft introduces the deposit institution bond repo rate (DR) as an additional reference interest rate benchmark for floating-rate CDs, alongside the existing Shibor benchmark. The PBOC stated that this change is intended to “enrich the pricing reference indicators for large-value CDs” and reserve policy space for future market development, according to CNFIN (Xinhua Finance).
Enhanced disclosure requirements are another key feature. Issuers must now disclose material events promptly on their official websites and designated disclosure platforms, improving transparency and investor protection.
Market Context and Competitive Dynamics
The regulatory update arrives at a pivotal moment for China’s banking sector. Bank net interest margins have compressed to historic lows, and competition for deposits has intensified. Major state-owned banks currently offer 1-year CD rates around 1.20% and 3-year rates around 1.55%, while smaller institutions offer significantly higher rates — up to 2.15% for 3-year products at some rural banks.
Jiang Han, Senior Researcher at Pangu Think Tank, explained to Time Weekly that the new rules are particularly significant for smaller banks: “This is an inevitable choice for small and medium-sized banks to cope with the ‘deposit maturity tide’ and alleviate deposit-raising pressure. Compared with large state-owned banks with extensive branch networks and strong brands, city commercial banks and rural commercial banks are limited by physical constraints such as ‘one bank, one store,’ putting them at a natural disadvantage in absorbing deposits.”
High-rate CD products above 2% have been rapidly snapped up by investors, with many products selling out within hours of issuance, reflecting strong demand for yield in a low-interest-rate environment.
Analysis and Implications
The new measures represent a significant modernization of China’s CD regulatory framework with several important implications. The formal codification of existing practices into primary regulation provides a stronger legal foundation for enforcement. The explicit permission for third-party platforms could significantly increase market liquidity and accessibility, potentially reshaping the competitive landscape.
As detailed by Gelonghui, the draft also strengthens pricing oversight, requiring that CD pricing comply with PBOC interest calculation rules and be subject to self-discipline management by the market interest rate pricing self-regulatory mechanism.
The addition of the DR rate as a pricing benchmark alongside Shibor gives banks more flexibility in pricing floating-rate CDs, potentially leading to more competitive and market-reflective pricing. This aligns with China’s broader interest rate liberalization agenda, which has been progressively implemented since 2013.
What’s Next
The public comment period runs until July 12, 2026, with feedback to be submitted via email or mail to the PBOC’s Monetary Policy Department. The exact implementation date remains to be determined, as the draft states it will take effect from a date yet to be specified.
Market participants will be watching closely for how banks, particularly small and medium-sized institutions, adjust their CD issuance strategies in response to the new rules. The extent to which third-party platforms participate and how the addition of the DR rate affects CD pricing will be key developments to monitor in the coming months.
As China navigates its deposit maturity wave and continues its financial regulatory reform agenda, the new CD management measures represent an important step toward a more transparent, liquid, and stable banking sector.