How the RMB Business Facility will help consolidate Hong Kong’s financial role

Hong Kong’s updated yuan financing tool for banks, featuring a quota 150 per cent larger than before, was launched on Friday, giving a significant boost to the use of the Chinese currency in daily global business.What is the RMB Business Facility?The RMB Business Facility is a funding window run by the Hong Kong Monetary Authority (HKMA) that allows participating banks to borrow yuan at the relatively cheap Shanghai three-month interbank offered rate, which is about 2 percentage points lower than the US Federal Reserve rate.The HKMA says the facility enables banks to offer renminbi financing to corporate clients in trade finance, capital expenditure and working capital term loans.How big is it?When the authorities launched its predecessor – the RMB Trade Financing Liquidity Facility – in February last year, a 100 billion yuan (US$14.7 billion) quota was distributed among 40 participating banks, focusing on trade finance.