HONG KONG Dec 6 A cross-border repo scheme
aimed at promoting the internationalisation of the yuan has been
used for the first time, with UBS AG and HSBC Holdings Plc the
first foreign institutions to give it a go.
The tri-party repo scheme, established in June, allows
global financial institutions to use securities held with
Euroclear Bank or JPMorgan as collateral to access yuan
liquidity from the Central Moneymarkets Unit of the Hong Kong
Monetary Authority, the city's de facto central bank.
Beijing has been slowly but steadily moving to
internationalise the yuan and global interest has soared in the
past few years as more countries and companies dip their toes
into settling trades with the Chinese currency.
Hong Kong, the largest offshore yuan centre, had a yuan
deposit pool of 554.8 billion yuan ($89 billion) as of the end
of October. Daily turnover in its yuan settlement system, has
surged as much as two-thirds since June to 250 billion yuan per
The deal was conducted between UBS' London office
and HSBC's Hong Kong branch, Euroclear said in
HSBC estimates the level of yuan deposits in Hong Kong will
increase to 30 percent of all Hong Kong deposits by the end of
2015 from the current 9 percent.
"Firms that manage these growing RMB reserves will naturally
seek to optimise their cash balances through the repo markets
with an international counterparty base," said Justin Chan,
HSBC's deputy head of global markets in Asia Pacific.