Hong Kong builds yuan and gold hub to rival dollar stablecoins

Beijing and Hong Kong on July 7 announced a package of measures to strengthen Hong Kong’s role in offshore yuan finance and gold settlement. Measures include trial operations of a central gold clearing and settlement system, revival of a US dollar‑denominated gold futures contract, plans to explore yuan‑denominated gold futures, an expansion of the Hong Kong Monetary Authority’s RMB Business Facility to 500 billion yuan, and an increase in the annual Southbound Bond Connect quota to 800 billion yuan.

Hong Kong began trial operations of the central gold clearing and settlement system. Authorities plan to expand the city’s total gold storage capacity to more than 2,000 metric tons within three years. The authorities also reinstated US dollar‑denominated gold futures and said they will study yuan‑denominated gold futures.

The HKMA raised the RMB Business Facility from 200 billion yuan to 500 billion yuan, effective July 10. The facility provides bank funding in offshore yuan for institutions operating in Hong Kong, increasing the available liquidity for yuan‑denominated transactions outside mainland China.

Separately, the annual Southbound Bond Connect quota for mainland investors was raised to 800 billion yuan. The expanded quota allows larger net purchases of offshore bonds through Hong Kong by mainland investors and increases the volume of capital that can flow from the mainland into offshore bond markets accessed via the city.

Officials described the measures as intended to strengthen the plumbing for yuan transactions and gold settlement in Hong Kong by improving clearing, settlement, storage and bank funding. The package provides additional infrastructure for larger gold trades and for yuan funding outside the mainland.

Some measures are already active. The RMB facility increase took effect on July 10. The gold clearing system has entered trial operations and storage expansion is targeted over a three‑year period. Market participants and investors will monitor whether institutions increase use of Hong Kong’s offshore yuan facilities and larger gold markets and how those changes interact with digital‑dollar liquidity provided by stablecoins.