1. [para. 1][para. 2][para. 3] China’s central bank, the People’s Bank of China (PBOC), announced 11 measures to strengthen Hong Kong’s fixed-income, currency, and offshore yuan markets, reinforcing Beijing’s push to expand the global use of the yuan through Hong Kong’s financial infrastructure. PBOC Governor Pan Gongsheng unveiled the package at the 2026 Fixed Income and Currency and Bond Connect Summit, stating that the yuan is moving beyond trade settlement into investment, financing, and reserve management. The coordinated measures involve the PBOC, Hong Kong Monetary Authority (HKMA), and Securities and Futures Commission (SFC), aimed at cementing Hong Kong’s role as the leading offshore yuan hub in a multipolar global monetary system.
2. [para. 4][para. 5] Six of the 11 measures target fixed-income and currency markets. Regulators plan to expand the Southbound Bond Connect program, raising its annual net investment quota from 500 billion yuan to 800 billion yuan ($117.8 billion). The program will also include repo transactions and investment products based on Hong Kong dollar- and yuan-denominated bonds, and its reach will extend to Macao’s bond market. HKMA Assistant Chief Executive Daryl Ho stated the higher quota partly aims to meet demand from mainland insurance companies newly allowed to join.
3. [para. 6][para. 7] The China Foreign Exchange Trade System and Hong Kong Exchanges and Clearing Ltd. (HKEX) will jointly develop an electronic fixed-income and currency trading platform. SFC Chief Executive Julia Leung noted the platform will complement existing channels, bringing additional liquidity and connectivity between Hong Kong and mainland markets. This follows a fixed-income and currency market road map issued by the SFC and HKMA in September 2025.
4. [para. 8][para. 9][para. 10] HKEX will launch five-year offshore Chinese government bond futures on August 3, providing foreign investors a hedging tool; overseas investors held 3.2 trillion yuan of Chinese bonds by end-May 2026. Regulators also plan to expand use of yuan bonds as eligible collateral, with onshore Chinese government and policy-bank bonds held through Northbound Bond Connect expected to be accepted by Hong Kong Futures Clearing Co. and SEHK Options Clearing House within 2026. SFC Executive Director Rico Leung noted such bonds already account for 17% of margin collateral at OTC Clearing Hong Kong.
5. [para. 11][para. 12] Another measure adds the seven-day depository institutions repo rate (FDR007) as a reference rate for Swap Connect from Q4 2026. The program, giving overseas investors access to mainland interest-rate swaps, has recorded total turnover over 13.3 trillion yuan, with average daily turnover rising to ~30 billion yuan in H1 2026 from ~3 billion yuan at launch. Additionally, the Northbound Bond Connect settlement deadline will be extended by one hour to 4 p.m. to ease operational pressure.
6. [para. 13][para. 14][para. 15][para. 16] Five measures focus on Hong Kong’s offshore yuan market. The PBOC supports the HKMA’s expansion of the RMB Business Facility (liquidity program launched October 2025), raising its quota from 200 billion to 500 billion yuan from July 10, with new borrowing tenors of 9 months, 2 years, and 3 years. HKMA Deputy Chief Executive Chen Weimin said the 300 billion yuan increase reflects strong demand; further increases are possible. The HKMA is also studying a seven-day offshore yuan liquidity tender mechanism via repos to improve pricing signals, and separately studying issuance of short-term offshore yuan debt instruments to fill gaps at the short end of the yield curve.
7. [para. 17][para. 18][para. 19] To support cross-border trade, the PBOC signed an arrangement with Bank Indonesia and the HKMA to promote local-currency settlement and reserves, with direct trading between offshore yuan and Indonesian rupiah targeted by end-2026. Chen said similar arrangements with other Asian economies could follow if the Indonesia framework proves effective. The final offshore yuan measure calls for the HKMA to share best practices with banks to encourage wider yuan use, including tailored products and cross-border cooperation.
8. [para. 20][para. 21] Governor Pan said the PBOC will also deepen links between fast-payment systems in the mainland and Hong Kong, expanding cross-border payment channels and improving risk controls. He added that China’s foreign-exchange reserves will continue to increase asset allocation in Hong Kong, providing more support for the city’s capital markets.
AI generated, for reference only
Sign in with Google
Sign in with Facebook
Sign in with 财新