Refinements to the Renminbi Liquidity Facility to Renminbi Business Participating Authorized Institutions
The Hong Kong Monetary Authority (HKMA) announced today two enhancements in the provision of renminbi (RMB) liquidity to Authorized Institutions participating in RMB business (Participating AIs) in Hong Kong.
Under the existing RMB liquidity facility, the HKMA provides one-week RMB funds to Participating AIs against eligible collateral, with funds available on a next day basis (T+1). In the light of the continued development of the offshore RMB market in Hong Kong, the HKMA introduces two enhancements of the facility with effect from 26 July 2013 :
1. In addition to providing funds of 1-week tenor on T+1 basis, the existing facility will provide one-day funds which will also be available on the next day (T+1). HKMA will continue to make use of the Swap Agreement with People’s Bank of China in providing such funds.
2. Overnight funds, available on the same day (T+0), will be provided to help banks meet their liquidity needs. The HKMA will use its own source of RMB funds in the offshore market to provide such lending, and expects the amount of overnight funds to be provided will be up to 10 billion RMB in total on a single day.
The terms and conditions of the enhanced facility are attached at the Annex.
“The HKMA’s introduction of two enhancements to the RMB liquidity facility will strengthen liquidity management of banks participating in the RMB business and support further development of Hong Kong as the hub for offshore RMB business”, said Mr Norman Chan, Chief Executive of the HKMA.
Participating AIs are welcome to use the facility to meet short-term funding needs. Nonetheless, they are advised to plan their funding ahead of time and avoid over-dependence on the RMB liquidity facility. The HKMA will review the terms and conditions of the facility in the light of actual operating experience.
Hong Kong Monetary Authority
25 July 2013