Bank of Japan and HKMA to link systems for easier trade
(12 April 2018 – Asia) Japan and Hong Kong will link their central bank systems to immediately settle transactions involving assets denominated in their respective currencies for easier cross-border trade.
Under the proposed system, the Bank of Japan and the Hong Kong Monetary Authority will facilitate real-time settlement between Japanese government bonds (JGBs) and Hong Kong dollars.
This will allow Japanese financial institutions to procure Hong Kong dollars with JGBs as collateral through the central bank network rather than having to exchange the yen for US dollars and then use US dollars to purchase Hong Kong dollars.
The system will also give Hong Kong financial institutions a platform to invest short-term excess funds.
The two central banks aim to complete the new system by Spring of 2021.