Since 2021, the People's Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) have actively promoted the pilot programs of the integrated domestic and foreign currency capital pool(the "high-tier capital pool") and centralized cross-border fund operation  (the "low-tier capital pool")in Shenzhen, Beijing, Guangdong and other places. Building on the experience gained from these pilot programs, the Notice promotes the high-tier capital pool nationwide, primarily serving large multinational corporations with relatively high access thresholds. The main contents are as follows:

• Establish a Unified Framework for Integrated Domestic and Foreign Currency Capital Pool

1. 1）Incorporate the domestic and foreign currency capital pool business into unified management, and encourage enterprises to carry out capital pool business in domestic currency.
2. 2）Set a one-year transition period. For those already engaged in other cross-border fund pooling operations and have obtained the fund pooling business filing under this Notice, the funds and accounts related to these other cross-border fund pooling operations must be cleaned up within the transition period.

• Access Conditions: In addition to meeting the basic compliance conditions, multinational corporations shall also meet the following quantitative indicators:

1. 1）No fewer than three domestic and overseas member enterprises shall participate in the capital pool business;
2. 2）All domestic member enterprises: the total amount of domestic and foreign currency international receipts and payments in the previous year shall be ≥ RMB 7 billion, and the total operating revenue in the previous year shall be ≥ RMB 10 billion; All overseas member enterprises: the total operating revenue in the previous year shall be ≥ RMB 2 billion.

• Functions of the Integrated Domestic and Foreign Currency Capital Pool

1. 1）Centralized Foreign Loan and Overseas Lending Quotas

• - Domestic member enterprises may independently determine the portion of centralized foreign loan or overseas lending quota, with the centralized ratio being adjustable no more than once per year.
• - Centralized quota for foreign loan: tentatively set at 3.5 times the audited owner's equity of the leading enterprise and domestic member enterprises from the previous year(for domestic member enterprises opting for partial centralization, the calculation is based on the centralized ratio). This policy is basically consistent with the foreign loan quota under the current macro-prudential model, but the foreign loan quota calculation for general enterprises also needs to consider the "maturity risk conversion factor".
• - Centralized quota for overseas lending: tentatively set at 0.8 times the audited owner's equity of the leading enterprise and domestic members from the previous year (for domestic member enterprises opting for partial centralization, the calculation is based on the centralized ratio). This is more preferential than the overseas lending policy for general enterprises and low-tier capital pools (currently 0.5 times the owner's equity).

2. 2）Centralized Collection & Payment and Netting Settlement of Current Account Funds

• - Centralized collection & payment: the leading enterprise through its domestic main fund account, centrally handles current account receipts and payments such as those for goods and services on behalf of domestic enterprises.
• - Netting settlement of current account funds: the leading enterprise, through its domestic main fund account, consolidates the current account receivables and payables of domestic and overseas member enterprises over a specified period, settling them as a single net amount. 

3. 3）Centralized Collection & Payment Business for Overseas Transactions of Overseas Member Enterprises

The leading enterprise may handle the centralized collection and payment business of trade-related funds between overseas member enterprises and overseas counterparties through the domestic main fund account. This business activity utilizes the centralized foreign loan quota that has been filed and approved for the leading enterprise.

• Functions of the Domestic Main Fund Account

1. 1）Settlement of capital account income: after the settlement of capital account funds into RMB, the RMB funds may still be deposited in the domestic main fund account, without the need to transfer them to the settlement-to-payment account.
2. 2）Facilitation of capital account payment: When using capital account income for payments, after committing to the authenticity and compliance of the transaction, the funds can be directly processed through the cooperating bank. Documentation verifying the authenticity of each transaction doesn’t have to be submitted to the bank in advance.