Policy Address 2026 | HK to introduce seven-day offshore yuan liquidity tendering mechanism

Hong Kong’s de facto central bank will introduce a tendering mechanism for seven-day offshore yuan liquidity to expand channels for banks to meet their short-term financing needs, said Chief Executive John Lee Ka-chiu.

The Hong Kong Monetary Authority will also explore the issuance of offshore yuan short-term debt instruments to provide more high-quality investment and liquidity management products for the market, while supporting the building of an offshore yuan yield curve, Lee said in his Policy Address.

The regulator is exploring enhancements to the currency swap agreement with the People's Bank of China to strengthen offshore yuan market liquidity, Lee noted.

The SAR will expand dim sum bond issuance with an enhanced tenor structure in due course, seeking support from the Ministry of Finance to increase the scale and frequency of bond issuance in the city, and encourage policy financial institutions to issue bonds.

The HKMA will encourage more foreign banks in Hong Kong to directly join the Cross-border Interbank Payment System (CIPS) to expand the clearing network, and will deepen collaboration with the central banks in such areas as ASEAN and Middle East countries, Lee said.

Hong Kong Exchanges and Clearing (0388) will launch an offshore yuan bond index as a reference for market trends and an underlying index for exchange-traded funds (ETFs).

Regulators will explore expanding product scope under the Southbound Bond Connect to include products with Hong Kong Dollar bonds and yuan bonds as underlying assets, and are preparing for the inclusion of yuan counters under the Stock Connect.

A bond repurchase business using Southbound Bond Connect bonds as collateral will also be developed, with a view to vitalising the assets of local and non-local investors, Lee added.

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