IDEAS home Printed from https://ideas.repec.org/a/ysm/ypfsfc/v5y2023i1p214-242.html
   My bibliography  Save this article

China: Central Bank Swap to Hong Kong Monetary Authority, 2009

Author

Listed:

Abstract

Starting in 2008, the People's Bank of China (PBOC) began to grow a global network of central bank swap lines, announcing six in 2008-09 alone. The largest of those lines, in January 2009, was a 200 billion renminbi (RMB; USD 29.2 billion) swap line to the Hong Kong Monetary Authority (HKMA). The PBOC and HKMA, in similarly worded announcements, mentioned two goals of the swap arrangement: to promote renminbi-denominated trade settlement in Hong Kong and to promote financial stability in Hong Kong and the region. Hong Kong was the most important offshore financial center for trading renminbi-denominated securities, and the swap lines enabled the HKMA to promise market participants that it would be able to make renminbi liquidity available in a crisis. In October 2010, in response to tightening offshore renminbi liquidity conditions as the local Hong Kong trade settlement bank reached a PBOC-set conversion quota, the HKMA drew on the line for RMB 20 billion to support renminbi trade settlement in Hong Kong. However, the HKMA ultimately extended no renminbi loans to Hong Kong banks during that episode. The HKMA and PBOC increased the swap line size and extended its terms over time. In 2022, they converted it into the PBOC's first standing swap facility, with an authorized amount of RMB 800 billion.

Suggested Citation

  • Arnold, Vincient, 2023. "China: Central Bank Swap to Hong Kong Monetary Authority, 2009," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 5(1), pages 214-242, July.
    • Handle: RePEc:ysm:ypfsfc:v:5:y:2023:i:1:p:214-242
    as

    Download full text from publisher

    File URL: https://elischolar.library.yale.edu/cgi/viewcontent.cgi?article=1485&context=journal-of-financial-crises
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    central bank swap line; China; Global Financial Crisis; Hong Kong; renminbi;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ysm:ypfsfc:v:5:y:2023:i:1:p:214-242. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/smyalus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.