Hong Kong national security judge Alex Lee promoted to the Court of Appeal

In September, Chief Executive John Lee Ka-chiu unveiled Hong Kong's first five-year plan, with a focus on promoting the greater use of the yuan outside mainland China. In a four-part series on the internationalization of the yuan, Lam Ka-sing explores Hong Kong's efforts to integrate the currency into everyday life, from vending machines to retail payments, government spending, and cross-border trade.

A notable example is at Central Ferry Pier No 8, where mainland Chinese tourist Lei encountered e-CNY, a digital currency and payment system developed by China's central bank, for the first time. Despite his initial surprise, Lei opted for Alipay instead of using the e-CNY option. As China aims to expand international use of the yuan amid geopolitical uncertainties and increasing trade, Hong Kong is making wider yuan use a priority in its annual policy address and its first five-year plan (2026-30).

With the world's largest offshore yuan liquidity pool, Hong Kong has seen renminbi deposits reach 1.3 trillion yuan as of July 31. To facilitate broader yuan use, the Hong Kong Monetary Authority has expanded its renminbi business facility to 500 billion yuan and is investing in education to share use cases of the currency in the region. However, bottlenecks remain, such as insufficient direct quotes between local currencies and the yuan.

The Hong Kong Monetary Authority has also established a bilateral transaction framework with Indonesia and China to facilitate direct offshore renminbi-Indonesian rupiah trading, reducing exchange-rate risks and transaction costs for businesses. This move could contribute to a more multicurrency global financial system as countries and businesses diversify their settlement arrangements in response to geopolitical tensions and evolving supply chains.