Beijing extends liquidity lifeline
The People's Bank of China and the Hong Kong Monetary Authority have agreed on a 200 billion yuan (HK$226.86 billion) currency swap, part of Beijing's efforts to support the city's depressed economy and bolster financial stability in the region.
The HKMA said yesterday the move was intended to improve liquidity in Hong Kong and the region and promote the development of yuan-denominated trade transactions between the city and the mainland.
Hong Kong's de facto central bank would have access to yuan from the mainland central bank for three years, whenever the city needed 'short-term liquidity support', the PBOC said yesterday.
Currency swap lines allow the authorities to tap funds from each other and lend to companies in those jurisdictions.
The HKMA said the agreement was aimed at providing short-term liquidity to mainland operations of Hong Kong banks and Hong Kong operations of mainland lenders.
Hong Kong lenders on the mainland and mainland banks in the city mainly rely on their own funding.
