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Hong Kong expands yuan lending facility for banks, raising quota to 500 bn
Hong Kong Monetary Authority launched the upgraded RMB Business Facility with a 500 billion yuan quota, letting banks provide renminbi financing for trade finance, capital expenditure and working capital loans at rates about 2 percentage points below the US Federal Reserve rate.
Hong Kong has launched an expanded yuan funding program for banks, with the Hong Kong Monetary Authority rolling out the upgraded RMB Business Facility on Friday. The update raises the facility’s quota by 150 percent to 500 billion yuan, a move aimed at increasing the use of the Chinese currency in global day to day business, according to SCMP Economy.
The RMB Business Facility is a funding window operated by the HKMA that lets participating banks borrow yuan at a rate described as about 2 percentage points lower than the US Federal Reserve rate. The HKMA says participating banks can use the funding to provide renminbi financing to corporate clients across trade finance, capital expenditure and working capital term loans.
SCMP Economy notes the program began as the RMB Trade Financing Liquidity Facility in February last year, when a 100 billion yuan quota was distributed among 40 participating banks focused on trade finance. It was renamed the RMB Business Facility in October, when eligibility was broadened to include capital expenditure and working capital loans.
The latest upgrade further expands the scale of the HKMA’s yuan liquidity support, targeting wider corporate funding needs beyond trade as the quota increases to 500 billion yuan.