Hong Kong is ramping up efforts to expand the use of local currencies across the Asia-Pacific region, including developing a local currency debt market, as part of a push to hedge against rising geopolitical risks, according to Hong Kong Monetary Authority (HKMA) CEO Eddie Yue Wai-man.
Speaking at the fourth edition of the Asean+3 Economic Cooperation and Financial Stability Forum in Hong Kong on Tuesday, Yue underlined the need to strengthen regional financial ties as Hong Kong and its neighbours grappled with tariff shocks, disrupted supply chains and heightened market volatility.
"While progress has been made, local currencies still play a relatively small role in the region's cross-border transactions and external financing, and the bulk of our trade invoicing remains denominated in foreign currencies," he said. The grouping refers to the 10 member states of the Association of Southeast Asian Nations plus China, Japan and South Korea.
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"We need to continue to enhance regional payments integration and local currency settlement to boost cross-border efficiency and strengthen economic resilience," the HKMA chief said. "This requires continued investments in deepening local capital markets, developing hedging instruments, and ensuring financial infrastructures are interoperable across borders."
The HKMA has in recent years linked its Faster Payment System with counterparts in Thailand and mainland China. Photo: Handout alt=The HKMA has in recent years linked its Faster Payment System with counterparts in Thailand and mainland China. Photo: Handout>
In a move towards developing a local currency debt market, the Asian Bond Markets Initiative - aimed at channelling Asia's vast savings pool into supporting regional investment - was launched in 2002.
Outstanding local currency bonds in emerging East Asia reached US$28.6 trillion by the end of June, up 3 per cent quarter on quarter, according to the Asian Development Bank.
"The vast majority of bonds issued in the region are now denominated in local currencies, making us much less vulnerable to external spillovers," Yue said.
The city's de facto central bank has in recent years linked its Faster Payment System (FPS) with counterparts in Thailand and mainland China.
A tie-up with Thailand's PromptPay system in 2023 has since allowed travellers to make QR code payments across both jurisdictions. Services between FPS and mainland China's Internet Banking Payment System were launched earlier this year.
Story ContinuesThe HKMA has also explored cross-border payment settlement applications through the mBridge project, a wholesale central bank digital currency platform jointly developed with the People's Bank of China, the central banks of Thailand and the United Arab Emirates, and the BIS Innovation Hub in Hong Kong.
"These are initiatives that we hope to take forward with our Asean+3 colleagues," Yue said.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved.
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