On June 16th, the People’s Bank of China (PBOC) announced on its official website that it will conduct a tender issuance of the fourth phase of central bank bills in 2025 in Hong Kong on June 18th. The bills will have a term of six months and an issuance volume of 30 billion yuan. Data shows that 20 billion yuan of six-month Hong Kong central bank bills will mature this month.
What Are Hong Kong Offshore RMB Central Bank Bills and Their Functions?
Background
In November 2018, the PBOC initiated the issuance of RMB central bank bills in Hong Kong. Since then, the issuance schedule has been relatively fixed, occurring approximately eight times a year. There have been a total of 12 issues with three different maturity varieties. The regular issuance of central bank bills in Hong Kong has played a significant role in enriching Hong Kong’s high-credit-rated RMB financial products and improving the RMB yield curve in Hong Kong.
Previous Issuance Situations
Historically, Hong Kong central bank bills have been widely welcomed by various types of investment institutions both domestically and internationally. The bidding multiples are generally above 2 times, demonstrating confidence in the RMB and the Chinese economy.
Balance of Hong Kong Central Bank Bills
Significance of Hong Kong Offshore RMB Central Bank Bills
Global Context
Against the backdrop of increasing global trade uncertainties and the decline in the safe-haven attributes of US dollar assets, enriching RMB investment options for the offshore market is conducive to enhancing the stability and security of investors’ asset allocation.
Strategic Importance
In recent years, the PBOC has established a regular mechanism for the issuance of central bank bills in Hong Kong. The issuance of offshore RMB central bank bills in Hong Kong is of great significance for consolidating and enhancing Hong Kong’s status as an international financial center and promoting the internationalization of the RMB.
Conclusion
The issuance of central bank bills in Hong Kong by the PBOC is a strategic move aimed at strengthening the offshore RMB market, enhancing investor confidence, and supporting the internationalization of the RMB. The upcoming issuance of 30 billion yuan in central bank bills on June 18th will further contribute to these goals, maintaining a stable balance of central bank bills in the offshore market.
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