China’s central bank to support HKMA in doubling of yuan liquidity for Hong Kong lenders
PBOC to increase yuan facility to US$28.68 billion and issue more sovereign yuan bonds to enhance city’s role as yuan hub, official says
China’s central bank will support Hong Kong’s monetary authority to double the amount of yuan liquidity available to local banks, helping them increase yuan lending and enhancing the city’s role as an international offshore centre for the mainland currency.
People’s Bank of China (PBOC) deputy governor Zou Lan said at the Asian Financial Forum (AFF) in Hong Kong on Monday that the central bank would provide more funding to allow the Hong Kong Monetary Authority (HKMA) to double the yuan liquidity facility to 200 billion yuan (US$28.68 billion) from next week.
In addition, the country would issue more yuan sovereign bonds and explore the launch of government bond futures in Hong Kong to meet international investors’ demand for the currency, he added.
“Hong Kong has been the world’s largest and most influential offshore yuan trading centre,” Zou said in a speech at the opening of the AFF. “The PBOC considers Hong Kong important and is firmly committed to continuing to roll out different measures to increase yuan liquidity.”
Launched in October, the facility, officially known as the RMB Business Facility, provides banks with cheap and stable yuan funding so that they can offer yuan loans to global customers.
The expansion was much needed, as the HKMA had already allocated 100 billion yuan to 40 banks in December, it said in a statement. The doubling would allow existing banks to get more liquidity and support the addition of more banks to the scheme, it added.