The second-largest commercial banking group in Hong Kong said Sunday that it will launch a yuan repurchase facility in a move that will boost the Chinese currency's business in the territory.
In a statement, Bank of China (Hong Kong) said the repurchase facility will open on Monday, allowing the sale of securities together with an agreement for the seller to buy back the securities at a later date.
The facility will operate through Hong Kong's Central Moneymarkets Unit to facilitate intraday liquidity management of participating banks in the yuan clearing system, the bank said. The Central Moneymarkets Unit provides computerized clearing and settlement facilities for securities.
In 2003, Chinese authorities appointed the Bank of China (Hong Kong) as the clearing bank of yuan banking business in Hong Kong. The bank began to offer yuan clearing services in relation to deposits, exchange, remittance and bank cards to participating banks in Hong Kong.
The introduction of the facility, which will let the original buyer of a yuan security effectively act as a lender and the seller as a borrower, will enhance the liquidity of the Chinese currency market in Hong Kong, bank officials said.
It is expected to facilitate prompt and efficient yuan settlements, and enable the launch of new yuan products and services in the future, paving ways for the long-term development of the yuan business in Hong Kong.
The Chinese government, in an aim to boost the internationalization of the yuan, has been moving to develop an offshore center in Hong Kong for trading yuan products so that the yuan may be circulated freely outside of mainland China via Hong Kong.