China’s central bank has pledged to deepen financial connectivity with Hong Kong, backing a sharp expansion of yuan liquidity and signalling further steps to strengthen the city’s role as the offshore yuan hub for the Greater Bay Area (GBA) and overseas markets, Reuters and RTHK report.
Speaking at the Asian Financial Forum on Monday, People’s Bank of China (PBOC) deputy governor Zou Lan said the central bank would support the Hong Kong Monetary Authority’s (HKMA) decision to double yuan funding under its swap-based facility to 200 billion yuan.
The expansion comes after strong take-up by banks, with the HKMA saying the initial 100 yuan quota of the Renminbi Business Facility (RBF) was fully used within three months of its launch in October. The authority said demand reflected the facility’s role in providing stable, lower-cost yuan funding for banks and their corporate clients.
“The experience so far suggests that the RBF has not only served corporates in Hong Kong, but has also successfully channelled offshore renminbi funds to regions such as ASEAN, the Middle East, and Europe,” it noted.
[See more: How Hong Kong’s digital aspirations are transforming Macao’s financial identity]
Zou also said the PBOC would also increase offshore issuance of yuan-denominated government bonds to meet rising demand from overseas investors and improve market liquidity. He added that authorities would broaden liquidity-management and hedging tools, including interest-rate and currency derivatives.
Other measures taken in the past year to tighten financial links between the mainland and Hong Kong include the June launch of the cross-jurisdiction Payment Connect platform and the expansion of the Bond Connect scheme – which now allows more mainland institutions to invest offshore.
These measures form part of Beijing’s broader push to internationalise the yuan and reduce reliance on the US dollar by promoting a more multipolar global monetary system.
As a major international financial hub and the world’s largest offshore yuan clearing centre, Hong Kong plays a central role in that strategy.
