Official Release of the 2025 Cross-Border Cash Pooling Regulations

On 26 December 2025, the People’s Bank of China and the State Administration of Foreign Exchange jointly issued the “Notice on Matters Relating to the Integrated Domestic and Foreign Currency Cash Pooling Business of Multinational Corporations” (Yinfa [2025] No. 251, "New Notice"). Building upon the April 2025 “Notice on the Issuance of the Administrative Provisions on the Integrated Domestic and Foreign Currency Cash Pooling Business of Multinational Corporations (Draft for Comments)” (“Advanced Cash Pooling” draft), the authorities have decided to formally promote the integrated cash pooling business nationwide. The promulgation of this policy document signifies the transition of the previously piloted “advanced” cash pooling policy from regional trials to national implementation.

The New Notice mark the end of the long-standing “dual track” regulatory regime. Previously, multinational corporations were required to establish separate cross-border two-way RMB cash pools and foreign exchange centralised operation systems. The new regulations dismantle this barrier, permitting enterprises to unify domestic and foreign currency funds through a single “domestic master account” nationwide, thereby achieving genuine integrated management of domestic and foreign currency funds. Furthermore, the final version introduces two unexpectedly favourable provisions: first, the transition period for clearing existing business has been extended from six months (as per the draft for comments) to one year, providing enterprises with ample time to adjust; second, the explicit introduction of foreign exchange receipt and payment facilitation policies further enhances the efficiency of cross-border fund flows.

 

1. Structural Reform and Transition Period Benefits

Historically, China’s cross-border fund management adhered to a “dual track” regulatory logic. Multinational corporations wishing to manage both domestic and foreign currency funds were compelled to establish two independent systems: the “cross-border two-way RMB cash pool” under the People’s Bank of China and the “foreign exchange centralised operation” under the State Administration of Foreign Exchange. This fragmented structure necessitated the maintenance of two entirely distinct account frameworks and compliance with disparate regulatory reporting requirements, significantly increasing compliance costs and operational complexity for multinational corporations. The New Notice, from draft to official release, fundamentally alter this landscape, achieving “unified standards and harmonised practices”. The New Notice allows eligible multinational corporations to implement integrated management nationwide, enabling the establishment of a “domestic master account” as a multi-currency account to centrally collect and allocate both domestic and foreign currency funds among member entities of the multinational corporate group. This structural reform empowers group treasurers to manage global liquidity from a unified perspective, eliminating the physical segregation between currencies.

Regarding the clearing of existing business and transitional arrangements, the New Notice demonstrates a notable degree of regulatory goodwill compared with the previous consultation draft. The consultation draft required multinational corporations to complete the clearing of funds and accounts involved in other cross-border cash pooling or two-way RMB cash pool businesses within six months of obtaining approval for the advanced cash pooling business. This short transition period raised concerns over potential liquidity pressures and operational risks. The final published New Notice, reflecting market feedback, makes a critical adjustment: Article 24 extends the transition period to one year. Thus, multinational corporations with existing cross-border cash pooling business and newly obtained regulatory approval are granted a one-year grace period to gradually transfer funds and close legacy accounts. This adjustment provides enterprises with sufficient time to plan and execute the migration of funds, avoiding disruptive “hard stops” that could impact daily operations, and highlights the regulators’ commitment to maintaining market stability throughout the reform process.

 

2. Quota Unlocking and Operational Autonomy

Beyond structural integration, the New Notice introduces a significant shift in quota management, moving from “rigid control” to “flexible adjustment”. It confirms the macro-prudential management framework, thereby enhancing enterprises' flexibility in cross-border fund operations. Specifically, the external debt leverage ratio is set at 2, with a macro-prudential adjustment parameter of 1.75; and the overseas lending leverage ratio is set at 1, with a macro-prudential adjustment coefficient of 0.8. These clearly defined parameters provide enterprises with a well-founded and predictable regulatory expectation.

The New Notice removes the previous constraints of “full aggregation” or “fixed quotas”, granting multinational corporations greater autonomy in fund management. This autonomy is most prominently reflected in the flexible determination of the “centralisation ratio”. Under the New Notice, domestic member entities of the multinational corporate group may, based on their operational circumstances and financing needs, independently decide the proportion of external debt and overseas lending quotas to be aggregated to the host enterprise, with adjustments permitted once per year. Any remaining quotas not aggregated may be retained by the group entities for their own external borrowing or overseas lending. This innovative mechanism has profound strategic implications: it enables group treasurers to strike an optimal balance between centralisation and decentralisation. For subsidiaries undergoing rapid expansion and requiring independent financing, the group may opt not to aggregate or to reduce the aggregation ratio, thereby preserving their ability to access low-cost international financing. Conversely, for mature subsidiaries with ample cash flow, the aggregation ratio may be increased to maximise the scale efficiencies of the group cash pool. This dynamic model of “integrated yet decentralised” management greatly enhances the financial resilience of multinational corporations in an increasingly complex and volatile global market environment.

 

3. Enhanced Operational Efficiency and Facilitation

In addition to macrostructural and quota management reforms, the most notable operational highlight of the New Notice is the formal introduction of “facilitation policies”. This provision, absent from the earlier consultation draft, is confirmed in Article 11 of the final published New Notice and constitutes a major policy benefit for high-quality, compliant enterprises. According to the New Notice, where both the cooperating bank and the multinational corporation (including the host and member entities) meet the facilitation pilot criteria, their centralised settlement of current account funds and netting operations may directly apply the facilitation policies for high-quality enterprises’ trade-related foreign exchange receipts and payments, the high-level cross-border trade opening pilot, and higher-level trade and investment facilitation pilots (please refer to the article "Facilitation Pilots" for the series policies).

Practically, this policy overlay will significantly reshape the corporate experience in managing cross-border funds. For enterprises eligible for facilitation policies, cross-border current account receipts and payments may be processed by banks based solely on payment instructions, without the need to submit contract, invoice, or other detailed supporting documents to verify transactional authenticity on a per-transaction basis. This “seamless” operational model shortens settlement timeframes from days to seconds, substantially reducing administrative burdens and compliance costs for group finance team. Furthermore, with respect to the capital account receipts and payments, the New Notice similarly clarify that enterprises, subject to providing a commitment regarding the authenticity and compliance of the underlying transactions, are exempt from providing authenticity documents in advance for each individual transaction. This further streamlining the “last mile” of fund movement and reinforces the role of the cash pool as an efficient global payment hub serving real business needs.

 

4. Bank Eligibility and Compliance Risk

With the implementation of the New Notice, a new and critical variable facing multinational corporations establishing cash pools is the qualification risk of cooperating banks. Article 4 of the New Notice introduces a strict “hard threshold” for bank eligibility, expressly requiring that the cooperating bank located at the host enterprise’s place of registration must have achieved at least a Category B rating in foreign exchange business compliance and prudential operation assessments over the past two years. More importantly, the New Notice introduces a stringent “dynamic circuit breaker mechanism”: if, during the course of business, a cooperating bank’s rating fall below the required standard due to compliance issues, it will be subject to immediate operational restrictions. It may continue to handle only existing business for previously registered clients, but is prohibited from offering new business categories to clients (such as adding new currencies or pooling functions) or onboarding any new cash pool clients.

This regulatory shift presents significant challenges for multinational corporations in managing bank relationships. Previously, corporate criteria for selecting banks focused primarily on funding costs, system capabilities, and service responsiveness. Under the New Notice, the compliance robustness of cooperating banks becomes the lifeline of cash pool's business continuity. If a cooperating bank experiences a compliance breach or a rating downgrade, the corporate cash pool may effectively fall into a state of “functionally freeze”, unable to expand or adjust in response to business developments. This may force enterprises to replace the host bank altogether. Yet migrating a fully operational, integrated domestic and foreign currency cash pool entails high system integration costs, extensive account change procedures, and potential business interruption risks. As such, incorporating the bank's regulatory ratings into core due diligence metrics, and establishing a periodic bank qualification review mechanisms, have become indispensable components of group treasury's risk management framework.

 

Takeaways

In light of the opportunities and challenges presented by the New Notice, multinational corporations should promptly formulate response strategies. Firstly, given the decisive impact of bank qualifications on business continuity, group treasury teams should immediately commence compliance assessments of current and potential cooperating banks. This should include not only a review of the banks' current regulatory ratings (ensuring Category B or above), but also a thorough evaluation of the robustness of their risk management frameworks to mitigate the risk of future “business circuit breaker” triggered by a downgrade in the banks' ratings.

Secondly, enterprises should make full use of the one-year transition period granted by regulators to develop detailed cash pool migration plans. For those currently operating two-way RMB cash pools centralised or foreign exchange fund management structure, it is advisable to use this window to clean up existing intra-group receivables and payables and to recalculate optimal centralisation ratios under the new framework, ensuring the new cash pool begins operation in an optimal state. At the same time, enterprises with strong compliance records should proactively engage with banks to apply for and confirm the applicable facilitation pilots policies. By layering these facilitation policies onto the new framework, enterprises can fully unlock the operational efficiencies enabled by the reforms, shifting cross-border fund management away from document-heavy processing towards value-added liquidity strategy management.

The issuance of the New Notice in 2025 marks a generational upgrade in the treasury management model for multinational corporations operating in China. From “dual track” to “integrated”, and from “rigid control” to “autonomous adjustment”, the New Notice provides a robust institutional foundation for multinational corporations to build globally unified, flexible, and efficient global treasury systems.

 

Disclaimer

This article is for reference only and does not constitute any form of legal advice or opinion. The information contained herein is based on the understanding and analysis of laws and regulations effective at the time of publication (including Yinfa [2025] No. 251). As regulatory policies may be adjusted over time, and local interpretations and practices may vary, and as specific business scenarios differ among enterprises, we strongly recommend that you consult a qualified lawyer or directly confirm with relevant regulatory authorities before making business decisions or taking specific actions. The authors and publishing platform accept no legal liability for any consequences arising from actions taken or not taken based on the content of this article.