HKMA upgrades banks’ RMB liquidity facility

New upgrades take effect today.

The Hong Kong Monetary Authority announced two upgrades in the provision of Renminbi liquidity to authorized institutions participating in the RMB business in Hong Kong to make short-term RMB funds easier to access.

Under the existing liquidity facility, the authority provides one-week RMB funds to participating authorized institutions against eligible collateral, with funds available on a next day basis (T+1).

In addition to providing funds of one-week tenor on T+1 basis, the existing facility will provide one-day funds that will also be available on the next day (T+1). It will continue to make use of the Swap Agreement with the People's Bank of China in providing these funds.

Overnight funds, available on the same day (T+0), will be provided to help banks meet their liquidity needs. HKMA will use its own source of RMB funds in the offshore market to provide lending, and expects the amount of overnight funds to be provided will be up to RMB10 billion in total on a single day.

HKMA said that the new revisions will strengthen RMB liquidity management of banks and consolidate Hong Kong's position as the leading offshore RMB business hub.

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