Hkma Swap Agreement

The People`s Bank of China (PBoC) and the Hong Kong Monetary Authority (HKMA) announced today that the agreement on monetary sweapage has been extended for a period of five years, its size being increased to RMB500 billion / 590 billion HKD, which amounts to 400 billion RMB / 470 billion HKD. The size of the swap line has been expanded to 500 billion yuan ($76 billion) or 590 billion Hong Kong dollars, 400 billion yuan, or 470 billion Hong Kong dollars, according to a PBOC statement. The pact is valid for a period of five years and can be renewed by mutual agreement. Swea-currency is short-term or daily and the money is much smaller than the maximum size of the deal with 400 billion yuan (470 billion HK), said the HKMA. Meanwhile, Hong Kong needs a large line of currency swaps on standby, as Hong Kong has the world`s largest pool of offshore liquidity of more than 600 billion yuan, HKMA said. The BPC and HKMA recently renewed their agreement on sweatshirts and extended the reciprocal volume from 400 billion yuan/470 billion HKD to 500 billion yuan/590 billion HKD over five years. Hong Kong`s monetary authority has dismissed rumours that it has transferred its $400 billion ($3.12 trillion) foreign exchange reserve to mainland China via foreign exchange swaps and has not been repaid. The People`s Bank of China (PBOC), the country`s central bank, said on Wednesday it had renewed a sweat exchange agreement with Hong Kong`s monetary authority and expanded the scope of the agreement. The agreement was signed by the People`s Bank of China (PBOC) and the Hong Kong Monetary Authority (HKMA). And the extension would be for a period of five years, according to a statement published on the PBOC website. HKMA has established a network of bilateral pension transactions on the use of U.S. Treasury bonds with other regional central banks. On 20 January 2009, HKMA and the People`s Bank of China signed a foreign exchange agreement under which short-term liquidity assistance may be granted to the continental operations of Hong Kong banks and the Hong Kong operations of mainland banks if necessary.

The agreement also contributes to the development of renminbi trading between Hong Kong and the mainland. HKMA has pension contracts with central banks or monetary authorities in Australia, mainland China, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore and Thailand. HKMA said the foreign exchange swap aims to increase short-term liquidity and support the offshore yuan market in the event of default in the settlement system. The Central Bank of China said on Wednesday it had renewed a bilateral currency sweatshirt mechanism with Hong Kong, raising the size from 400 to 500 billion yuan ($76 billion). Monetary cooperation between the BPC and HKMA aims to strengthen confidence in Hong Kong`s financial stability and promote financial stability in the region and the development of renminbi trade between Hong Kong and the mainland. The currency swap contract is three years, renewable by appointment between the two parties and capable of providing cash support of up to RMB200 billion.227 billion. On 20 January 2009, the People`s Bank of China (PBOC) and the Hong Kong Monetary Authority (HKMA) signed a currency exchange agreement that provides short-term liquidity assistance for hong Kong bank continental operations and Hong Kong`s foreign exchange operations.