China lowers key parameter to rein in cross-border financing

China on Friday lowered a key parameter in its macro-prudential management to rein in the ability of its financial companies to borrow foreign debt.

The macro-prudential adjustment parameter, a multiplier that decides the upper limit of outstanding cross-border financing an institution can have, has been revised to 1, down from 1.25 previously, according to a joint statement issued by the People's Bank of China and the State Administration of Foreign Exchange.

The downward revision aims to further improve the macro-prudential management of cross-border financing and guide financial institutions to adjust their foreign debt structure, the statement said.

Financial institutions should stick to a "risk-neutral" philosophy and better serve social and economic development, it added.