China establishes international depository, avoiding Western financial pressure

Over the past three years, Western nations have actively debated how to confiscate Russian financial assets while minimizing reputational and legal risks. Recently, Ukrainian President Volodymyr Zelensky outright stated that the $300 billion in frozen Russian assets held in European banks and depositories was "Ukraine's money.” While the European Union has so far implemented a plan to seize the interest earned on Russian Central Bank assets, France has proposed full confiscation should Russia violate any future ceasefire agreement in Ukraine. Against this backdrop, China – a key holder of securities in Western jurisdictions and a declared rival of the West – started selling off US Treasury bonds, reducing its holdings to 2009 levels. Beijing has taken another step by creating an alternative to Euroclear, Europe's primary depository, which played a central role in freezing Russian assets. Hong Kong Launches International Depository According to Yu Wai-man, President of Hong Kong's Monetary Authority, the Hong Kong Stock Exchange (HKEX) has initiated a project to modernize its Central Moneymarkets Unit (CMU) with the goal of transforming it into Asia's largest central securities depository. In October 2023, the company Clearing Limited was established, beginning operations in January 2024. On March 4, CMU and HKEX signed a memorandum of understanding to enhance cooperation in optimizing Hong Kong's capital market securities infrastructure.