HONG KONG, Jan. 13 — The People's Bank of China (PBOC), China's central bank, on Monday announced a series of measures to reinforce Hong Kong's status as an international financial center.
The PBOC is working closely with other financial regulators on the mainland and in Hong Kong to improve the offshore renminbi market, optimize financial market connectivity, and enhance the convenience of payment and settlement, said PBOC Governor Pan Gongsheng at the 18th Asian Financial Forum held in Hong Kong.
The regulators will introduce a renminbi trade financing liquidity arrangement with terms of 1 month, 3 months, and 6 months with a total quota of 100 billion yuan (13.64 billion U.S. dollars), providing a stable and low-cost funding source for renminbi trade financing for commercial banks in Hong Kong, Pan said, adding that they will also proactively support Hong Kong in introducing offshore renminbi government bond futures.
The regulators will further enhance the mechanism of the southbound bond connect, support mainland investors in more easily purchasing multi-currency bonds and extend the settlement time. They will also orderly expand the scope of investors and increase the number of custodian banks, Pan said.
"The prosperity and development of the capital market are the core and foundation of Hong Kong's status as an international financial center," Pan said, pledging to support more high-quality enterprises to list and issue bonds in Hong Kong, and increase the proportion of national foreign exchange reserves allocated in Hong Kong to open up broader space for Hong Kong's financial growth.
The two-day forum is expected to attract around 3,600 financial and business representatives from over 50 countries and regions to attend over 40 sessions on topics including the global economic outlook, new markets opportunities, artificial intelligence, fintech, sustainability and philanthropy.
Brief
"On January 13, the People's Bank of China announced a series of measures to reinforce Hong Kong's status as an international financial center. The measures include improving offshore renminbi market connectivity, enhancing payment and settlement convenience, and introducing a 100 billion yuan trade financing liquidity arrangement with commercial banks in Hong Kong."
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Purpose
The People’s Bank of China (PBOC), China’s central bank, has announced a series of measures to reinforce Hong Kong’s status as an international financial center. The PBOC aims to improve the offshore renminbi market, optimize financial market connectivity, and enhance payment and settlement convenience.
These measures are part of the PBOC’s efforts to support Hong Kong’s financial growth and development. By introducing a new series of initiatives, the PBOC is working closely with other financial regulators on the mainland and in Hong Kong to create a more favorable business environment for commercial banks, investors, and companies operating in Hong Kong.
Effects on Industry
The PBOC’s announcement has significant implications for the financial industry in Hong Kong. The new measures are expected to improve the offshore renminbi market, making it easier and more convenient for businesses to conduct trade financing transactions. This will have a positive impact on commercial banks in Hong Kong, as they will be able to provide their clients with stable and low-cost funding sources.
The enhanced mechanism of the southbound bond connect is also expected to benefit mainland investors who want to purchase multi-currency bonds. This will increase investment opportunities for these investors and contribute to the growth of Hong Kong’s financial markets.
Relevant Stakeholders
The stakeholders most affected by this announcement are:
- Commercial banks in Hong Kong, which will be able to provide their clients with stable and low-cost funding sources.
- Mainland investors who want to purchase multi-currency bonds through the enhanced mechanism of the southbound bond connect.
- Businesses operating in Hong Kong, which will benefit from improved trade financing transactions.
- Financial regulators on the mainland and in Hong Kong, who are working closely with the PBOC to implement these new measures.
Next Steps
To comply with or respond to this update, stakeholders should:
- Commercial banks: Prepare for increased demand for renminbi trade financing services and explore opportunities to provide their clients with stable and low-cost funding sources.
- Investors: Take advantage of the enhanced mechanism of the southbound bond connect to invest in multi-currency bonds.
- Businesses: Benefit from improved trade financing transactions and consider listing or issuing bonds in Hong Kong.
Any Other Relevant Information
The 18th Asian Financial Forum, held in Hong Kong, is expected to attract around 3,600 financial and business representatives from over 50 countries and regions. The forum will feature over 40 sessions on topics including the global economic outlook, new markets opportunities, artificial intelligence, fintech, sustainability, and philanthropy.
The PBOC’s announcement is part of a broader effort to support Hong Kong’s development as an international financial center. By introducing these measures, the PBOC aims to create a more favorable business environment for commercial banks, investors, and companies operating in Hong Kong.
