Several banks and their wealth management subsidiaries have implemented the first batch of foreign currency repurchase business within the year. According to the China Foreign Exchange Trading Center, since February this year, Hangyin Wealth Management, CMB Wealth Management, Xingyin Wealth Management, and Everbright Wealth Management have completed multiple foreign currency repurchase transactions using Shanghai Clearing House managed bonds as collateral through the China Foreign Exchange Trading Center system. The interviewee stated that the foreign currency repurchase business carried out by bank wealth management subsidiaries is not only an inevitable choice to enrich wealth management product allocation tools and improve the efficiency of foreign currency asset utilization, but also an important measure to balance financial openness and risk prevention, which is conducive to enhancing domestic foreign currency supply and preventing foreign exchange market overshoot. The implementation of foreign currency repurchase business is an important step for bank wealth management subsidiaries to move towards globalization, but it is necessary to carefully balance returns and risks, and gradually build an international investment research and risk control system. The continuous increase in foreign currency repurchase business among participating institutions refers to the foreign currency fund exchange behavior based on collateral between financial institutions. Specifically, foreign currency repurchase refers to the transaction behavior in which financial institutions borrow foreign currency funds by pledging assets such as bonds, and repurchase these assets at a predetermined price in the future to repay the financing principal and interest. On March 3rd, Postal Savings Bank of China successfully launched the foreign currency repurchase business of bonds under the custody of Shanghai Clearing House with the support of Shanghai Clearing House. The implementation of foreign currency repurchase business this time demonstrates the positive significance of Postal Savings Bank of China relying on self-developed system technology to empower and leverage its own advantages to actively participate in interbank market transactions. Reporters have found that since February this year, Hangyin Wealth Management, CMB Wealth Management, Xingyin Wealth Management, and Everbright Wealth Management have completed multiple foreign currency repurchase transactions using Shanghai Clearing House managed bonds as collateral through the China Foreign Exchange Trading Center system. They have also completed clearing and settlement through Shanghai Clearing House under a multi-level custody model, becoming one of the first bank wealth management subsidiaries to successfully complete domestic and foreign currency repurchases. The above-mentioned wealth management institutions participating in foreign currency repurchase business have expressed that the implementation of this business further enriches the investment tools for the company's layout in the foreign currency market based on online foreign currency interbank deposits. As stated by CMB Wealth Management, domestic and foreign currency repurchases provide diversified asset sources for foreign currency wealth management products, enriching the investment scope of wealth management products. In the future, the company will continue to actively cooperate and promote the development of foreign currency repurchase business, expand trading partners, and contribute to enhancing market vitality. Hangyin Wealth Management stated that foreign currency repurchase and online foreign currency interbank deposits have become important tools for the company's foreign currency wealth management fund management operations, among which foreign currency repurchase business provides high-quality liquidity management tools for the company's daily opening of US dollar wealth management products. In recent years, the scope of participating institutions in foreign currency repurchase business has continued to expand, gradually expanding from state-owned large banks and joint-stock banks in the early stages of business development to various types of participating entities such as urban rural commercial banks, finance companies, and overseas institutions. As of the end of 2024, 126 domestic and foreign institutions have participated in foreign currency repurchase business, with a total annual transaction volume of approximately 590 billion US dollars. The future development trend is positive. Yang Haiping, a researcher at Shanghai Institute of Finance and Law, told Securities Daily reporters that the first batch of foreign currency repurchase business of bank wealth management subsidiaries has landed. For the market, as a new type of financial institution, bank wealth management subsidiaries joining the interbank foreign currency repurchase market can expand the depth of the market, promote market expansion and influence, and improve the efficiency of fund allocation in the market. For bank wealth management subsidiaries, it can enrich their investment options and improve their liquidity management level. Tian Lihui, Dean of the Institute of Financial Development at Nankai University, stated in an interview with Securities Daily that the first batch of foreign currency repurchase business implemented by bank wealth management subsidiaries has a certain positive impact on the industry and market. Specifically, foreign currency repurchase provides short-term foreign currency liquidity management tools for bank wealth management subsidiaries, optimizes fund allocation, and alleviates the problem of maturity mismatch between foreign currency assets and liabilities. Moreover, by expanding foreign currency asset investment channels, more wealth management products linked to foreign currency interest rates or exchange rates can be launched to meet customers' global asset allocation needs. At the same time, the participation of bank wealth management subsidiaries in international repurchase transactions can accelerate the interconnection between the domestic market and the global financial system, and help promote the internationalization of the RMB. However, opportunities and challenges coexist in foreign currency repurchase business, and risks cannot be ignored. Li Peijia, a senior researcher at the Research Institute of Bank of China, told Securities Daily reporters that foreign currency repurchase business is relatively complex, involving multiple fields such as interest rates, exchange rates, and counterparty credit risk assessment. Bank wealth management subsidiaries should not only attach importance to market risk management, but also to credit, liquidity, and counterparty risk management. On the one hand, changes in interest rates in major economies around the world can affect the level of foreign currency interest rates. When foreign currency interest rates fluctuate, bank wealth management subsidiaries may face fluctuations in returns. On the other hand, in foreign currency repurchase business, if the counterparty encounters financial difficulties, deteriorating credit conditions, or even bankruptcy, it may not be able to fulfill the repurchase obligation or pay principal and interest on the repurchase due date as agreed, and the wealth management subsidiary may face the risk of unrecoverable funds. In Tian Lihui's view, the participation of bank wealth management subsidiaries in foreign currency repurchases mainly faces four challenges: insufficient foreign exchange risk management capabilities, limited collateral valuation, high liquidity risk, and lack of international experience. We need to improve the mechanism for hedging exchange rate risks, dynamically monitor mortgage rates, and strengthen the global market research team. With the opening of financial markets, financial infrastructure such as foreign exchange trading centers and Shanghai Clearing House are continuously optimizing transaction settlement mechanisms, enriching collateral, and laying the foundation for the development of foreign currency repurchase business. Yang Haiping stated that looking ahead, it is expected that the domestic and foreign currency repurchase business will maintain a high growth rate and maintain active product innovation. In order to maintain innovation in this market, the corresponding financial infrastructure will continue to improve its level of intelligence. Tian Lihui stated that the future development trend of domestic and foreign currency repurchase business is positive. With policy support, the market is expected to expand, scale up, and accelerate product innovation. With the deepening of financial openness, regulatory authorities may further simplify transaction processes, expand the scope of collateral (such as including offshore RMB bonds), and attract more institutions to participate. Foreign funded institutions have accelerated their entry through channels such as "Bond Connect", and the domestic foreign currency repurchase transaction volume is expected to continue to rise as the demand for foreign currency asset allocation of Chinese funded institutions increases. (New Society)