House China panel chair asks Fed to review Hong Kong’s access to dollar backstop

According to an exclusive report from CNBC, John Moolenaar, the Republican chair of the U.S. House Select Committee on the Chinese Communist Party, sent a letter to the Federal Reserve last week asking it to review whether the Hong Kong Monetary Authority should remain eligible for the Fed’s Foreign and International Monetary Authorities repo facility, or FIMA. The program allows central banks to obtain short-term U.S. dollar liquidity by posting U.S. Treasuries as collateral. Moolenaar argued that the legal and institutional autonomy that once set Hong Kong apart from mainland China, and supported its preferential treatment under U.S. law, has been fully dismantled. He also linked the issue to China’s recent push to promote the renminbi as an alternative to the dollar. The Fed said it had received the letter and would respond, while the HKMA declined to comment. CNBC said Hong Kong once borrowed as much as $1.4 billion through the facility in May 2020 and has not materially used it since. Economists cited by CNBC questioned whether restricting access would strengthen the dollar, with one arguing that the facility helps reinforce the dollar’s role in global finance and the safe-haven status of U.S. Treasuries.