The Hong Kong Monetary Authority announced on the 26th that it will launch a new "Renminbi Business Fund Arrangement" starting from October 9th, expanding the use of eligible funds and optimizing the Renminbi working capital arrangement to ensure sufficient liquidity in the market to expand offshore Renminbi business and further promote the use of offshore Renminbi in the real economy. The Chief Executive of the Hong Kong Monetary Authority, Yu Weiwen, introduced in an article published on the same day that the new "RMB Business Fund Arrangement" will be implemented in three stages. In the first phase starting from October 9th, banks (participating banks) that have been allocated RMB trade financing liquidity quotas since February this year will be able to use RMB business fund arrangements at lower interest rates, calculated based on the Shanghai Interbank Offered Rate, eliminating the previously added 25 basis point premium. In addition, the arrangement will allow participating banks to provide RMB trade financing services to corporate clients through overseas banking institutions of the same group, in order to further enhance Hong Kong's radiation effect on the offshore market. Starting from December 1st, specific RMB capital expenditures and working capital term loans will be included in the eligible business scope, significantly increasing the application scenarios for participating banks and overseas institutions to use RMB business funds arrangements, providing banks with a more predictable and stable RMB funding cost channel. Starting from February 2nd next year, participating banks can replace collateral as needed during the repurchase transaction period. The management and settlement cycle of collateral in repurchase transactions will be fully automated to ensure the liquidity of the collateral market and contribute to the sustainable development of the Hong Kong bond market. Yu Weiwen stated that starting from October 9th, the Hong Kong Monetary Authority will also optimize the arrangement of RMB liquidity. Specific measures include reallocating daytime and overnight RMB funds to help banks meet the increasing demand for cross-border RMB payment settlement daytime funds. In addition, two week and one month term repurchase agreements with next day (T+1) settlement will be added to support banks in having greater flexibility in managing funds. Yu Weiwen mentioned that there has been a significant increase in demand for RMB as a financing currency in the market recently. The ratio of RMB loans to deposits in the banking industry has risen from about 20% in September 2022 to over 90% in June this year, and the demand for longer-term RMB loans from enterprises is also increasing. (New Society)