The Hong Kong Monetary Authority (HKMA) and the People's Bank of China (PBOC) have announced six new measures to further deepen financial cooperation between Hong Kong and mainland China. A key initiative is a cross-border payment system, slated for launch by mid-year.
This fast payment system will enable real-time, small-value cross-border payments 24/7, mirroring Hong Kong's Faster Payment System. Residents of both regions will be able to make instant transfers using their mobile phone numbers, according to HKMA Chief Executive Eddie Yue Wai-man. Technical testing concluded last month, with a phased rollout and gradual service improvements planned.
Concurrently, the HKMA will introduce a new RMB trade financing facility with a 100 billion RMB (approximately HK$106.17 billion) allocation. This aims to provide banks with stable and cost-effective funding.
Financial institutions will receive RMB liquidity for terms of one, three, and six months, at interest rates based on onshore RMB rates plus a margin, Yue explained. The facility's launch is scheduled for the end of February. However, HKMA Head of Monetary Operations Kimberly Cheng Chi-man clarified that it won't overlap with existing 40 billion RMB and 20 billion RMB liquidity facilities provided by designated primary liquidity providers. Cheng anticipates this new facility will incentivize banks to offer more RMB trade financing services.
Further measures focus on Bond Connect enhancements. The HKMA will extend settlement times for Southbound Bond Connect transactions and allow for settlement in currencies beyond RMB, including USD and EUR. It will also support the development of an offshore RMB repurchase market using Northbound Bond Connect bonds as collateral.
The Securities and Futures Commission announced that, effective immediately, overseas investors can utilize onshore bonds issued by the Ministry of Finance and mainland policy banks (accessible via Northbound Bond Connect) as margin collateral for Northbound Swap Connect transactions. The HKMA highlighted the ongoing collaboration between regulators in both regions to promote the use of onshore RMB bonds as collateral in offshore markets.
Finally, measures to facilitate finance within the Greater Bay Area include the PBOC's inclusion of new banks offering attestation-based account opening services for Hong Kong residents.