In a speech at Hong Kong’s Asian Financial Forum, the People’s Bank of China outlined China’s 2025 macro policy priorities and a set of measures being prepared with the Hong Kong Monetary Authority (HKMA) and the mainland and Hong Kong securities regulators to deepen financial cooperation and support Hong Kong’s role as an international financial centre and offshore renminbi hub. The address pointed to more proactive fiscal policy, a moderately loose monetary stance using tools including interest rates and reserve requirement ratios, and continued de-risking efforts, citing a CNY 10 trillion quota-backed programme to swap outstanding local government hidden debt. Planned Hong Kong measures span offshore renminbi market development, market connectivity and payment settlement. For renminbi liquidity, support includes the HKMA adding a renminbi trade finance liquidity facility under the existing renminbi liquidity arrangement using swap funds, with one, three and six-month maturities and a total size of CNY 100 billion; the speech also referenced a CNY 800 billion swap arrangement and regular issuance in Hong Kong of renminbi government bonds and central bank bills. On capital markets, it backed the introduction of offshore bond repurchase transactions under Bond Connect, with cross-border bond repo to follow, and signalled support for Hong Kong to launch offshore renminbi sovereign bond futures as regulators advance preparatory work. It also said Bond Connect bonds will be supported as eligible collateral in Hong Kong, including for posting Swap Connect margin, and flagged optimisation of Southbound Bond Connect to facilitate multi-currency bond purchases and extend settlement time. Further steps cited include broader use of Bond Connect bonds as collateral across Hong Kong markets, an expanded investor base and additional custodian banks for Southbound Bond Connect, and accelerated interconnection of mainland and Hong Kong fast payment systems to enable real-time cross-border remittances, alongside a wider set of banks participating in witness account opening for Hong Kong and Macao residents.
Central Bank of the Republic of China 2025-01-13
People's Bank of China outlines Hong Kong support package including CNY 100 billion renminbi trade finance liquidity facility and Bond Connect repo plans
The People’s Bank of China, with the Hong Kong Monetary Authority and securities regulators, outlined measures to enhance financial cooperation and support Hong Kong's role as an international financial centre. Initiatives include developing the offshore renminbi market, enhancing market connectivity, and expanding payment settlement systems. Measures involve a CNY 100 billion renminbi trade finance liquidity facility, a CNY 800 billion swap arrangement, and introducing offshore bond repurchase transactions under Bond Connect.