John Moolenaar Urges Federal Reserve to Cut Hong Kong Access

Representative John Moolenaar, chairman of the House Select Committee on the Chinese Communist Party, has urged the Federal Reserve to review and potentially cut off the Hong Kong Monetary Authority's access to the Foreign and International Monetary Authorities (FIMA) Repo Facility. In a letter to the U.S. central bank, Moolenaar argued that China has dismantled the legal and institutional autonomy of Hong Kong, which removes the justification for the territory's preferential treatment under U.S. law.

Moolenaar cited China's efforts to promote the renminbi as a global alternative to the U.S. dollar and noted that the People's Bank of China created a similar bond-loan facility in June. He stated that the Federal Reserve should not be a passive participant in this process and that the Chinese Communist Party should not be allowed to copy the U.S. system.

The Federal Reserve confirmed receipt of the letter and plans to respond. While Hong Kong drew $1.4 billion from the facility in May 2020, it has not used the facility materially since. Analysts suggest Federal Reserve Chairman Kevin Warsh may avoid actions that could interfere with sensitive U.S.-China relations.