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RMB internationalisation has become a central pillar of Hong Kong’s economic and financial policy agenda, reflecting both local priorities and broader national objectives. While greater international use of the RMB presents significant opportunities for Hong Kong’s financial sector, including stronger capital markets activity, wealth management growth, and deeper integration with mainland China, constraints in offshore RMB liquidity and market depth remain key challenges.
Recent policy measures, including enhancements to the RMB Business Facility, are helping address these issues, but further market development will be required. Businesses should expect expanding RMB opportunities, greater Hong Kong–mainland market integration, and continued policy focus on developing Hong Kong’s offshore RMB and fixed-income markets.
Hong Kong’s first Five-Year Plan (5YP) consultation, published 15 June, identifies the consolidation of Hong Kong’s position as the leading global offshore Renminbi (RMB) centre as a key policy priority. This is not a new theme. On 20 May, Secretary for Financial Services and the Treasury (FSTB) Christopher Hui’s speech to the Legislative Council (LegCo) reiterated the Hong Kong authorities’ view that RMB internationalisation is core to the territory’s long-term development. These comments echo the emphasis on the issue in the 2026-27 budget speech delivered by Financial Secretary Paul Chan in February 2026 and in the policy address delivered by Chief Executive John Lee in September 2025, reflecting the increasing prevalence of this issue in government policy.
Beyond political rapprochement with mainland Chinese policy, RMB internationalisation offers key benefits for Hong Kong’s financial sector, including:
However, while the RMB’s use in international trade has expanded rapidly in recent years, the development of offshore RMB financing has lagged, putting a ceiling on global adoption of the currency and the broader benefits China may seek to derive from currency internationalisation. This includes the development of a comprehensive alternative to the US-led international payments architecture.
A key constraint on the offshore RMB's financial use is liquidity. The HKMA aligns the offshore RMB with its onshore counterpart via a liquidity management framework, which can contribute to volatility in offshore borrowing costs and periods of tighter asset market liquidity. These conditions can, in turn, reduce incentives for market participants to borrow, invest, and transact in RMB.
To address the issue of market liquidity the HKMA implemented the RMB Business Facility, with Phase Three effective since 2 February 2026. This allows Hong Kong banks to effectively borrow at mainland rates. Although facility revamps since 2025 have been significant in reducing firms’ exposure to volatile offshore RMB borrowing costs and limiting speculative attacks on the currency, they do not entirely resolve asset market liquidity issues. Further progress will require expanding asset markets and offering investors a wider range of tools to manage market risks.
Despite strong growth in both dim sum and panda bond issuance, driven in part by the Bond Connect schemes, limited foreign investor access to the RMB bond market remains a notable deficiency. This reflects a broader challenge across Asia, where fixed-income markets remain generally smaller and less internationally integrated than those in the US and Europe.
Increasing liquidity and depth in RMB asset markets should contribute to a virtuous cycle by attracting further demand for and issuance of securities. The gradual introduction of RMB-denominated derivatives will boost this by allowing for hedging capabilities (such as interest‑rate and FX instruments) to reduce risk and manage liquidity, as well as permitting leverage and arbitrage strategies that will attract greater participation by financial firms. These developments are opportunities in themselves but will also set the stage for greater participation in the Connect schemes.
As the share of RMB-denominated and mainland-origin assets within Hong Kong’s capital markets increases, market performance, liquidity conditions, and investor sentiment will also become increasingly synchronised across the two jurisdictions.
Despite prevailing market consensus that the renminbi will appreciate in the medium term, the currency’s appeal for financing continues to grow, helped by China’s ongoing priority for currency stability and low mainland interest rates. The RMB Business Facility has complemented the appeal of low borrowing costs by removing the threat of spiking offshore rates, which plagued the offshore RMB in the 2010s.
However, while both renminbi funding options and signs of global fragmentation are increasing, the RMB is not positioned to rival the US-dominated financial system in the foreseeable future. US strengths in the size of its open capital markets, its massive stock of safe assets and its unrivalled position as a net importer of goods (and exporter of financial assets) lock in the US dollar’s incumbency.
Low rates in China will continue to drive rapid growth in Dim Sum and Panda bond issuance. The RMB Business Facility will contribute to the development of the offshore RMB bond market by creating additional demand for sovereign bonds to be used as collateral. However, Hong Kong’s fixed income and commodities (FIC) market is smaller and less developed than its Western counterparts, which restricts its ability to function as a fully multi-asset hub. This also limits the incentives for foreign businesses to hold RMB outside of real-economy transactions.
Hong Kong regulatory authorities have elevated this priority with the 2025 ‘Roadmap for the Development of Fixed Income and Currency (FIC) Markets’, which sets out a clear agenda centring around four key pillars: primary market issuance, secondary market liquidity, offshore RMB business, and next-generation infrastructure. One of the next major developments to watch will be new regulation relating to mainland government bond futures in Hong Kong, in the wake of recent onshore reforms. Establishing a futures market for this asset segment will have a positive impact on the wider RMB bond market in Hong Kong.
This blog was written by Director Dr. Lisa Ross, Manager John Marrett, and Consultant Oriane Voets. Lisa, based in Singapore, is a seasoned politics, policy, and regulatory affairs professional and leader, with over 14 years of experience across the financial services industry and legal academia. John, based in Hong Kong, has over ten years of experience advising clients across East and Southeast Asia on financial services, currencies, sovereign risk, policy, and regulatory issues. Oriane, based in Hong Kong, has previous experience interning at public affairs consultancy APCO Worldwide and the European Chamber of Commerce in Hong Kong.