PBOC pledges stronger China-Hong Kong market ties

[HONG KONG] China will promote greater financial market connectivity between the mainland and Hong Kong, deputy governor Zou Lan of the People’s Bank of China (PBOC) said on Monday (Jan 26).

Speaking at the Asia Finance Forum in Hong Kong, Zou said that the central bank would support and advance the development of the city’s offshore yuan market and push for the launch of yuan-denominated government bond futures in Hong Kong.

China will support the Hong Kong Monetary Authority’s (HKMA) move to double yuan funding under last year’s swap facility to 200  billion yuan (S$36.4 billion), Zou added.

China will increase offshore issuance of yuan-denominated government bonds to boost liquidity and meet rising demand from overseas investors for high-quality yuan assets, Zou noted.

China will also broaden liquidity-management and hedging tools for foreign investors, expand interest-rate and currency derivatives, and push for the listing of yuan government bond futures in Hong Kong, he pointed out.

Measures taken in recent months to deepen financial cooperation with the Asian financial hub include the launch of cross-border Payment Connect and expansion of the Bond Connect scheme to allow more onshore institutions to invest offshore. REUTERS