Hong Kong boosts renminbi supply to banks in push for China currency

[HONG KONG] Hong Kong will double its supply of renminbi available for banks to borrow, in the latest step to meet the growing demand and help China boost the global use of its currency.The total size of the RMB Business Facility (RBF) in the city will rise to 200 billion yuan (S$36.4 billion) with effect from Feb 2, the Hong Kong Monetary Authority (HKMA) announced on Monday (Jan 26).The programme allows banks to receive loans of up to one year from the de facto central bank, using the Shanghai Interbank Offered Rate as the pricing benchmark.The facility has received an “overwhelming response” from the banking sector since its launch in October 2025, with the existing quota fully allocated to 40 participating banks, the HKMA said.It has not only served local corporate needs but also channelled renminbi funds to regions such as South-east Asia, the Middle East and Europe, it added.The global appetite for funding in renminbi, whose borrowing costs are cheaper than those in the US dollar and euro, has increased in recent years. The expanded programme would help Hong Kong strengthen its role as a leading offshore yuan hub, and aid Chinese authorities’ efforts to internationalise its currency at a time of waning confidence in the US dollar.Becky Liu, head of China macro strategy at Standard Chartered Bank, said that the announcement “comes much sooner than expected, indicating stronger-than-expected demand for (renminbi) liquidity in the offshore market”, as the lower interest rates made the renminbi a much more attractive funding currency.Outstanding renminbi loans issued by China’s onshore banks to overseas entities rose to a record of 2.5 trillion yuan as at the end of 2025, up from 979 billion yuan as at end of 2022, data compiled by Bloomberg show. The RBF is a replacement of an original renminbi-funding facility launched in February 2025 to support trade finance, with its use broadened to include corporates’ intra-group funding activities and loans for capital expenditure. The HKMA has access to an 800 billion yuan currency swap with the People’s Bank of China (PBOC) to back the programme.Meanwhile, the PBOC also voiced its fresh support for developing the renminbi business in Hong Kong. China will increase the annual issuance of offshore yuan-denominated government bonds and explore the possible launch of offshore bond futures, PBOC deputy governor Zou Lan said at a forum on Monday.“We see (renminbi) internationalisation accelerating in 2026 as the (renminbi) is gradually emerging into a ‘safe haven’ currency, backed by its strong economic and trade fundamentals,” said Stanchart’s Liu. She expects more global funding, settlement as well as direct investment to be conducted in renminbi. BLOOMBERG