The central bank of China announced on Thursday that it will purchase more yuan bonds in
Hong Kong to expand its international presence. The reform measures include the liberalization of the provisions on repurchase agreements made by foreign institutions, doubling of the quota of daily trading, and the availability made more accessible under the Bond Connect program.
According to the officials, the move will boost liquidity, inflow of foreign investors, and the image of Hong Kong as a financial gateway. The plan comes at a time when China is contemplating the alternatives to dollar-based markets as a result of the increasing geopolitical tensions. The step is a long-term plan of Beijing to internationalize the yuan and promote Hong Kong as one of the leading offshore financial centers, even in the face of political and economic pressure.
