Three Renminbi trends Financial Institutions should watch
As Renminbi use grows, Financial Institutions are assessing whether its markets can support liquidity, risk, funding and reserve needs at scale.
The first phase of Renminbi (RMB) internationalisation was defined largely by growth in cross-border trade settlement and investment, offshore RMB markets and broader adoption across global commerce. As trade, capital and investment flows between China and the rest of the world expanded, financial institutions reassessed the role of RMB within a more multi-currency global environment.
As explored in a previous article on RMB strategy for financial institutions, institutions are reassessing currency strategy amid shifting trade, capital and investment flows. The conversation is now moving from access to execution: how effectively RMB can be deployed, funded, hedged and mobilised within institutional frameworks.
This shift is taking place against a backdrop where China accounts for more than 15 per cent of global goods trade, while RMB still represents a significantly smaller share of global payments activity, highlighting room for further growth in cross-border RMB usage. It is also reinforced by the scale of China’s capital markets: with the world’s second-largest bond and equity markets, China is becoming an increasingly important destination for foreign investors seeking portfolio diversification, market access and RMB-denominated opportunities.
Three structural trends are becoming increasingly important in shaping the next phase of RMB internationalisation.
- Deeper capital markets
- Broader collateral and liquidity usability
- More developed offshore funding channels
Together, they will help determine how far RMB can support institutional participation at scale.
The next phase of RMB internationalisation will increasingly be shaped by how effectively RMB markets can support institutional liquidity, funding and reserve management needs. For financial institutions, the focus is moving beyond access toward broader operational usability of the RMB ecosystem.
Karen NgGlobal Head, RMBI Engagement
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RMB capital markets are becoming more investable at institutional scale
As noted earlier, China’s capital markets have continued to deepen over the past decade, with growing international participation across the bond and equity markets reinforcing RMB’s role within global investment portfolios. As home to the world’s second-largest bond and equity markets, China is making RMB assets increasingly relevant within global capital allocation frameworks.
That strategic relevance is also becoming more embedded in institutional allocation frameworks. Chinese government bonds (CGB) have been included across major global fixed income indices, including the Bloomberg Global Aggregate Index, FTSE Russell World Government Bond Index and J.P. Morgan Government Bond Index-Emerging Markets, helping to anchor RMB exposure more firmly within global fixed income portfolios. China A-shares have likewise been progressively included in major global equity benchmarks such as MSCI and FTSE Russell, reinforcing the role of RMB-denominated assets within global multi-asset allocation frameworks.
Beyond index inclusion, that relevance is increasingly reinforced by the hedging tools and market connectivity needed to support institutional participation at scale. China’s repo market is developing in ways that broaden access to onshore and offshore funding against China Interbank Bond Market collateral, and is moving closer to international market conventions. The shift towards a title transfer mechanism that would support rehypothecation, together with the recent recognition of the Global Master Repurchase Agreement within the China interbank bond market repo space, are important steps in aligning RMB repo practices with global financing frameworks.
CGB futures is now available to QFI investors, strengthening the hedging tools available to institutional investors. At the same time, Bond Connect, CIBM Direct, QFI and Swap Connect are giving offshore investors more established access routes into onshore RMB bonds and related risk management tools, making RMB capital markets easier to access, hedge and finance at institutional scale.
In combination, these developments are making RMB capital markets easier to access, hedge and finance – and more consistent with institutional investment requirements
What this means for financial institutions: scaling RMB participation
For financial institutions, stronger market investability makes RMB participation easier to scale within existing portfolio, treasury and risk management frameworks.
The repo developments matter because they support more capital-efficient participation. By financing bond positions through repo, capital can be reused rather than remaining locked up, supporting more active portfolio management and broader participation at scale.
Allowing them the access to CGB futures markets give institutional investors better tools to manage duration risk, making it easier to scale portfolio participation in China’s bond market.
More integrated Bond Connect, CIBM Direct, QFI and Swap Connect channels give investors greater flexibility to access assets, manage risk and participate in RMB markets through more connected routes.
For investors, this can support greater confidence in scaling RMB allocations, integrating exposures more effectively into portfolio construction, and managing funding and risk within broader institutional frameworks.
Trend 2
RMB assets are becoming more usable across collateral, margining and liquidity frameworks
One of the clearest signals of RMB market maturation is the growing focus on collateral usability. A currency ecosystem is defined not only by investability, but by whether its assets can function operationally across collateral, margiing and liquidity frameworks.
In that context, Chinese government bonds are increasingly being assessed as instruments that can support funding, liquidity and collateral management, rather than as portfolio assets alone. As repo and liquidity markets evolve, that focus is broadening from securities financing and treasury operations to the use of RMB bonds as non-cash collateral for margin posting and under broader collateral management arrangements such as ISDA Credit Support Annex agreements.
This expanding usability is becoming evident across a broader range of RMB bond applications. Onshore bonds purchased through the Northbound Bond Connect channel can already be used as eligible collateral for the Hong Kong Monetary Authority’s RMB Liquidity Facility and for margin posting at OTC Clearing Hong Kong Limited.
Collateral recognition is also broadening internationally. Since 6 May 2025, London Clearing House (LCH) has accepted USD- and EUR-denominated China Government Bonds as eligible non-cash collateral for margin posting, and in June 2025 LCH and Central Moneymarkets Unit (CMU) OmniClear signed a memorandum of understanding that included plans to facilitate the future acceptance of CNH-denominated CGBs held in the CMU.
This direction is also reinforced by Hong Kong’s 2025 Policy Address, which highlighted efforts to connect with markets such as Switzerland and the United Arab Emirates and to promote the use of offshore Chinese government bonds as collateral across different clearing houses, further expanding the use cases of RMB assets.
Most recently, People’s Bank of China (PBoC) also announced the new Foreign and International Monetary Authorities RMB Repo Facility which provides another use case of holding onshore China bonds. This is a back stop facility that the eligible public sector institutions can tap by using eligible Chinese bonds as collateral.
Collectively, these developments are extending the operational usability of RMB assets across collateral, margining and liquidity frameworks.
Scaling RMB participation is no longer just about accessing China’s markets; it is about connecting investors to the right execution, funding and risk management channels.
Pierre MengalInterim Regional Head, Greater China & North Asia, FSS
Pierre also highlighted that providers with connectivity across Bond Connect, CIBM Direct, QFI and Swap Connect can help investors participate in RMB markets with greater confidence, efficiency and scale.
What this means for financial institutions: stronger collateral and balance-sheet functionality
For reserve managers, treasury functions and capital sensitive investors, the key question is increasingly whether RMB assets can be mobilised efficiently across funding, margining and liquidity frameworks rather than simply held as long-term positions.
As RMB assets become more usable across repo, collateral and margining arrangements, they are gaining stronger operational relevance within institutional balance-sheet frameworks. That matters for financial institutions because it can improve funding flexibility, strengthen liquidity management and make RMB exposures more balance-sheet efficient.
More broadly, continued development of China’s repo and collateral ecosystem supports stronger secondary market liquidity, more flexible funding and wider acceptance of RMB assets as functional collateral within institutional margining and treasury structures.
Trend 3
Offshore RMB ecosystems are evolving beyond settlement into broader funding and liquidity networks
Offshore RMB ecosystems are increasingly evolving beyond trade settlement alone, as the development of offshore RMB markets is now being shaped more clearly by the depth, resilience and connectivity of the funding and liquidity channels that support institutional use at scale.
That evolution is visible first at the level of offshore RMB hubs. Hong Kong remains the world’s largest offshore RMB hub, supporting deep pools of liquidity across cross-border financing, settlement and treasury activity – and it remains central not only because of its scale, but because policy measures are increasingly focused on broadening the practical channels through which onshore RMB funding can be accessed and deployed outside of China. In 2025, the Hong Kong Monetary Authority’s RMB Business Facility, leveraging the currency swap agreement with the PBoC, expanded eligible financing beyond trade finance to include working capital and capital expenditure, while also supporting wider RMB funding distribution through participating Hong Kong banks’ overseas intragroup networks. The facility is sized at RMB 200 billion – roughly 10 per cent of the offshore RMB liquidity pool outside of China – and sits on top of the standard RMB Liquidity Facility extended to banks in Hong Kong since 2012.
This support is not concentrated in a single centre. Similar RMB liquidity provision is developing across other regional hubs. In 2020, the Monetary Authority of Singapore launched an RMB 25 billion initiative to deepen RMB liquidity in Singapore, on the back of its bilateral currency swap agreement with the PBoC, providing funding of up to three months to primary dealers through its money market operations to strengthen banks’ ability to meet growing RMB settlement, trade and investment financing needs in Singapore and the region.
These hub-level facilities sit within a wider network of official liquidity support. The PBoC’s bilateral currency swap agreements with 32 countries are seeing greater use, with their 2026 first-quarter monetary policy report pointing to increased utilisation as central banks tap them more actively for RMB liquidity. Enhanced policy support is also creating a more sustainable channel for domestic banks to supply offshore RMB liquidity, facilitating wider RMB adoption in cross-border trade and financial activity, and strengthening the depth and resilience of offshore RMB markets.
Against that backdrop, infrastructure connectivity remains an important, though secondary, part of the picture. The continued expansion of CIPS supports the broader institutionalisation of RMB cross-border payments infrastructure, reinforcing ecosystem connectivity even if it is not itself a direct driver of offshore funding depth.
Read as a whole, these developments point to a broader shift beyond the traditional offshore CNH deposit pool, with offshore RMB markets becoming more functionally diversified across four reinforcing layers: hub-level liquidity support, broader offshore funding channels, official liquidity backstops and stronger cross-border infrastructure connectivity. A common thread runs through them: much of this offshore liquidity is increasingly being channelled from the onshore pool in an orderly manner, through bilateral currency swap lines and the local RMB liquidity facilities central banks have built on top of them – deepening the offshore pool and making it more stable and liquid over time.
The next phase of RMB internationalisation is about converting market depth into practical commercial use. As offshore RMB liquidity, funding and collateral channels continue to develop, RMB is becoming more usable across treasury, financing and risk management activities.
Jerry ZhangGlobal Head of RMB Commercialisation
Jerry also mentioned that for clients, this means greater ability to integrate RMB into how they manage capital, liquidity and cross-border opportunities.
What this means for financial institutions: deeper offshore RMB funding and liquidity networks
For financial institutions, the key question is no longer simply whether RMB can be used cross-border, but whether RMB liquidity can be accessed, distributed and deployed through channels broad, reliable and scalable enough for institutional funding and treasury needs.
Deeper, more diversified funding channels makes RMB a more dependable funding currency for institutions operating outside China. With liquidity no longer concentrated in a single centre or reliant on the offshore deposit pool alone, institutions are less dependent on any one source, supporting more resilient RMB funding and treasury operations, including under stressed conditions.
For reserve managers, a more stable and liquid offshore RMB pool can make it easier to hold and deploy RMB with greater confidence as part of broader liquidity management. This market depth helps reinforce RMB’s role as a reserve currency by supporting its practical usability, complementing its formal recognition in the IMF’s Special Drawing Rights basket, where it now carries a 12.28 per cent weighting.
Hong Kong’s role as an offshore RMB liquidity and risk management hub remains strategically important in this context, particularly as integration between offshore and Mainland funding and risk channels deepens.
The multi-currency imperative is becoming operational
As the global financial system becomes more multi-currency, financial institutions are reassessing not only where capital and liquidity flows are shifting, but how effectively different currency ecosystems can support investment, funding and reserve management objectives.
The next phase of RMB internationalisation is likely to be shaped less by adoption alone, and more by whether RMB ecosystems can support institutional participation at scale through liquidity resilience, collateral usability, funding flexibility and market interoperability.
The implications will differ by FI segment.
- For banks, the priority is liquidity deployment: using deeper RMB funding channels to support cross-border client financing and balance-sheet efficiency.
- For reserve managers, sovereign institutions and insurers, the priority is reserve deployability: ensuring RMB assets can be mobilised through collateral, repo and liquidity frameworks when needed.
- For active fund managers and institutional investors, the priority is execution confidence: being able to finance positions, hedge risk and scale RMB participation more efficiently.
Across all segments, the common shift is clear: RMB internationalisation is becoming less about access alone, and more about whether RMB can function reliably within institutional liquidity, funding, collateral and risk management frameworks.
To find out more about how Standard Chartered supports financial institutions across RMB liquidity management, cross-border financing, treasury, risk management and market access, explore our RMB internationalisation advisory and offerings today.
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