China central bank unveils steps to boost yuan bond market in Hong Kong

China’s central bank will roll out further measures to support the development of Chinese yuan bonds in Hong Kong and accelerate global use of its currency, a senior official said on Thursday (Sep 25).

The comments come as Beijing steps up efforts to internationalise the yuan amid rising geopolitical tension and trade friction with the US.

The central bank would support foreign institutions in conducting repo business to boost efficiency of yuan bond use, said Zou Lan, the deputy governor of the People’s Bank of China (PBOC).

“The global impact and attractiveness of the Chinese bond market have greatly increased in recent years,” he told a forum co-hosted by Hong Kong’s financial regulators.

“RMB bonds offer high diversification value for investment portfolios from a risk aversion standpoint.”

Zou also mentioned plans to expand the pool of Swap Connect market makers, enhance management for quote providers, and raise the daily net trading limit to 45 billion yuan (S$8.1 billion) from 20 billion, to help manage interest rate risk.

Authorities will work to supply more high-credit offshore yuan assets in the Hong Kong market and accelerate preparations for the launch of yuan-denominated government bond futures there, Zou added.

Measures taken this year 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.

In June, PBOC governor Pan Gongsheng told a gathering he expected the largely US dollar-based global monetary system to become multipolar. REUTERS