The People’s Bank of China is building new plumbing for the offshore renminbi market, setting up a facility designed to give foreign institutions better access to RMB liquidity through repurchase agreements.
What the PBOC is actually doing
The facility centers on repo operations, which are essentially short-term borrowing arrangements where institutions pledge collateral (in this case, RMB-denominated bonds) in exchange for cash. The PBOC has been working closely with the Hong Kong Monetary Authority on these enhancements. New measures announced in January 2025 enable offshore RMB repo transactions using Northbound Bond Connect holdings as collateral. Those operations are slated to begin in September 2025.
Bond Connect is the channel that lets foreign investors trade in mainland Chinese bond markets without needing separate onshore accounts. Using those bonds as repo collateral makes holdings that might otherwise just sit in a portfolio do double duty as a source of short-term funding.
The eligible participants list includes offshore central banks, international organizations, sovereign wealth funds, and qualified foreign institutional investors.
