Use of yuan hits 6-month high in Hong Kong’s fast-payment system

Hong Kong's fast-payment system for yuan transactions reached a six-month high in July, with values soaring to 350.3 billion yuan (US$60 billion), representing a 34% increase since February, according to Hong Kong Interbank Clearing Ltd. Analysts attribute this surge to the expanding commercial scope of the Payment Connect project, launched jointly by the Hong Kong Monetary Authority and the People's Bank of China in June 2025, and the broader demand for renminbi assets.

Payment Connect enables instantaneous, small-value cross-border transfers by directly linking Hong Kong's faster payment system with mainland China's internet banking system. This growth has expanded into everyday retail transactions, including university tuition, medical expenses, and cross-boundary salary remittances. Gary Ng, a senior economist at Natixis Corporate and Investment Bank, noted that the rise reflects a broader trend of increasing demand for renminbi payments, with Payment Connect adding additional catalysts.

The growth also stems from the ongoing migration of payment infrastructure towards the FPS system. Mainland regulators aim to bolster the currency's global footprint while maintaining tight controls over capital outflows to prevent illegal capital flight. HSBC Hong Kong recently notified certain mainland investment clients to submit a self-declaration confirming funding sources via its mobile app by September 12.

The transaction momentum aligns with Beijing's efforts to internationalize the yuan and hedge against US dollar-dominated financial systems amid geopolitical friction and global trade realignment. In July, HKICL reported total yuan transactions across all clearing channels in Hong Kong at 51.74 trillion yuan, significantly higher than Hong Kong dollar transactions at HK$42.69 trillion and US dollar transactions at US$2.26 trillion.

The People's Bank of China has prioritized expanding the international role of the yuan, bolstering offshore liquidity, and upgrading cross-border payment architecture in its strategic blueprint for the next five years. The HKMA has also expanded Hong Kong's renminbi liquidity facility to 500 billion yuan, extended funding tenors to up to three years, and continued scaling up China's foreign exchange reserves in the city.