China’s central bank said on Monday that it has upgraded a currency swap facility with Hong Kong to a permanent agreement and expanded the size to 800 billion yuan ($119.40 billion) from 500 billion yuan.
The agreement, signed by the People’s Bank of China (PBOC) and the Hong Kong Monetary Authority, is the PBOC’s first standing swap agreement, according to a statement posted on its website.
The PBOC said the upgraded agreement could provide long-term liquidity support to the Hong Kong market, help stabilize market expectations, and promote the development of Hong Kong’s offshore yuan market.
The agreement came as Hong Kong celebrates 25 years since its return to Chinese rule.
“This year marks the 25th anniversary of Hong Kong’s return to the motherland. The signing of the agreement will help consolidate Hong Kong’s status as a global financial centre and promote the long-term and prosperous development of Hong Kong’s financial industry,” read a separate statement from the PBOC.
China’s President Xi Jinping said on Thursday during a rare visit to the global financial hub that the city has overcome its challenges and “risen from the ashes”.
Xi also said China would support Hong Kong’s role as an international finance and trade hub.
Mainland Chinese and Hong Kong regulators will also create a new programme to allow mutual access between the Hong Kong and mainland interest rate swap markets, they said in a joint statement on Monday.