CNH liquidity squeeze drives up Hibor volatility

RMB payment exceeds asset growth in Hong Kong, giving banks a funding headache

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A rapid increase in the use of renminbi for payments in Hong Kong has not been matched by a growth in CNH assets with the resulting liquidity shortage as banks struggle to settle trades causing almost threefold spikes in overnight Hibor during the first quarter of 2015.

The volume of renminbi settlements in Hong Kong has increased rapidly since 2014 with the average daily transaction levels on the real time gross settlement (RTGS) system breaking the one trillion yuan ($161 billion) barrier in

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Stemming the tide of rising FX settlement risk

As the trading of emerging markets currencies gathers pace and broader uncertainty sweeps across financial markets, CLS is exploring alternative services designed to mitigate settlement risk for the FX market

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