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China Launches $13 Billion Yuan Trade Finance Initiative to Bolster Hong Kong's Financial Role

The new measures aim to enhance yuan liquidity, expand Bond Connect, and strengthen Hong Kong's position as a global financial hub.

  • China's central bank and the Hong Kong Monetary Authority (HKMA) introduced a 100 billion yuan ($13.6 billion) liquidity facility to provide stable, lower-cost yuan funding for banks and companies in Hong Kong.
  • The initiative allows banks to access yuan funding for one, three, and six-month periods to support trade, replacing the previous short-term overnight funding model.
  • The Bond Connect scheme will now include U.S. dollar and euro-denominated bonds, and transaction settlement times will be extended to 4:30 p.m. local time to deepen market access.
  • Mainland institutional investors, such as insurers, will gain expanded access to trade bonds in Hong Kong, with further details of this plan to be finalized by Beijing authorities.
  • The measures are part of a broader effort to solidify Hong Kong's role as an offshore yuan hub and strengthen its financial connectivity with mainland China and international markets.
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