Repo market opens to short-term foreign loans

China has opened a market for short-term loans to foreign banks, giving them access to cheaper yuan funding as policymakers encourage greater global use of the currency.

All overseas yuan clearing and settlement banks that participate in the interbank bond market can conduct repurchase agreements and move the funds abroad, the People's Bank of China said in a statement on Wednesday. There are 107 offshore lenders that can exchange debt with their local counterparts and the change will make repos possible for most of them, including HSBC Holdings Plc and Standard Chartered Plc.

The change comes as China seeks to bolster the case for the International Monetary Fund to grant the yuan reserve status later this year. The currency failed to qualify in a 2010 review because it wasn't deemed to be freely usable. Onshore interbank short-term money rates have fallen below that of Hong Kong after the PBOC reduced interest rates three times since November and cut major banks' reserve ratios twice this year.