Key facts
- The People's Bank of China (PBOC) is launching a new RMB Repo Facility for Foreign and International Monetary Authorities (FIMA RMB Repo).
- The facility will provide yuan liquidity to eligible overseas central banks, international institutions, and sovereign wealth funds.
- Participants can use Chinese government bonds and other high-grade bonds as collateral for repo transactions.
- This initiative aims to deepen the offshore yuan market and increase global demand for yuan-denominated assets.
- Offshore RMB deposits in Hong Kong have exceeded RMB 1 trillion.
- The PBOC has been actively developing offshore RMB infrastructure, including CNH bill issuance and enhancements to the HKMA's RMB Liquidity Facility.
The People's Bank of China (PBOC) is implementing measures to bolster the offshore yuan's liquidity and broaden the supply of yuan-denominated assets. A key initiative is the establishment of the RMB Repo Facility for Foreign and International Monetary Authorities (FIMA RMB Repo). This facility will allow eligible overseas central banks, international financial institutions, and sovereign wealth funds to access yuan liquidity from the PBOC by using Chinese government bonds and other high-grade bonds as collateral.
This move is part of a broader strategy to enhance the offshore RMB infrastructure, which includes expanded swap lines, regular central bank bill issuance, and support for offshore yuan sovereign bonds. The PBOC has been working with the Hong Kong Monetary Authority (HKMA) on these enhancements, building on years of development. The HKMA's RMB Liquidity Facility, originally established in 2012, has seen improvements, and the PBOC has been issuing CNH bills in Hong Kong since 2020-2021.
Analysts suggest the facility is a proactive effort to increase global demand for yuan assets, potentially transforming the yuan from a trade currency into a reserve and investment currency. The eligible participant list is broad, aiming to reduce barriers for major institutional players. Offshore RMB deposits in Hong Kong have already surpassed RMB 1 trillion as of early 2026, indicating strong interest. While the facility provides a tool for liquidity management and asset allocation, it operates within China's existing capital controls and does not signify a shift in broader capital account policy.