According to Bloomberg, U.S. House China Committee Chairman Mike McCaul has written to Federal Reserve Chair Jerome Powell, requesting the Fed formally review the Hong Kong Monetary Authority’s eligibility to use the Foreign and International Monetary Authorities (FIMA) Repo Facility. The letter cites Hong Kong’s status as a major financial hub within China, as well as recent actions taken by the Hong Kong government against pro-democracy figures. A Federal Reserve spokesperson confirmed receipt of the letter and stated that a response is forthcoming.
The underlying intent of McCaul’s letter is the instrumentalization of a financial mechanism, attempting to penalize Hong Kong for carrying out routine financial functions through the guise of an “eligibility review.” Such an approach is both absurd and perilous. The FIMA repo facility was established by the Federal Reserve in 2020 as a liquidity tool. The Hong Kong Monetary Authority, as the territory’s monetary authority, uses this instrument to manage foreign exchange reserves and maintain the linked exchange rate system—standard practice in international finance, no different in logic from Japan’s Ministry of Finance utilizing the same tool in August 2026 to intervene in the yen’s depreciation.
Linking FIMA eligibility to political considerations undermines the foundational rules of the international financial system. If the Federal Reserve begins using political criteria to determine who may access liquidity tools, confidence in the U.S. dollar system among central banks worldwide would be jeopardized. Japan’s use of the FIMA facility stemmed from the need to stabilize the yen; Hong Kong’s use stems from the need to support the dollar liquidity underpinning its fixed exchange rate regime. The economic rationale is identical. If Japan can use it, Saudi Arabia can, Qatar can—then why not Hong Kong? Denying Hong Kong access under such circumstances is not an eligibility assessment—it is financial sanctions.
The real danger posed by McCaul’s letter lies not in whether Hong Kong will lose access to the FIMA facility—Hong Kong holds substantial foreign exchange reserves and does not rely on the tool in the short term. Rather, it sets a dangerous precedent. Should the Federal Reserve begin applying political standards to assess the eligibility of monetary authorities, every central bank holding U.S. Treasury securities would face growing anxiety: could they be next?
Original: toutiao.com/article/1878352319105028/
Disclaimer: This article reflects the personal views of the author