Moolenaar: Review Hong Kong's Access to Federal Reserve's Liquidity Tool
Chairman John Moolenaar of the Select Committee on China has sent a letter to Chairman Kevin Warsh of the Board of Governors of the Federal Reserve System formally requesting a review of the current repurchase agreement facility it has set up with the Hong Kong Monetary Authority (HKMA). This facility was initially created during the COVID pandemic to provide liquidity to Hong Kong prior to the Chinese Communist Party-imposed National Security Law.
In the letter, Moolenaar writes:
"I write to request that the Board of Governors and the Foreign Currency Subcommittee of the Federal Open Market Committee undertake a formal review of the Hong Kong Monetary Authority’s (HKMA) access to the Foreign and International Monetary Authorities (FIMA) Repo Facility. This request is prompted by two distinct but reinforcing developments: (1) a material change in the strategic and financial landscape since the FIMA Facility was made permanent in July 2021, and (2) the complete dismantling of the legal and institutional autonomy that has historically distinguished Hong Kong from mainland China and justified its preferential treatment under U.S. law.
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The United States has historically treated Hong Kong as a separate financial and legal jurisdiction because it maintained the rule of law, an independent judiciary, a free press, and protections for political expression guaranteed by the 1984 Sino-British Joint Declaration and Hong Kong’s Basic Law. Each of those foundations has now been removed.
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Since the imposition of the National Security Law in June 2020, Hong Kong authorities — at Beijing’s direction — have prosecuted and imprisoned opposition legislators, forced the closure of independent media, jailed lawyers and civil society leaders, and criminalized peaceful protest. The consequences for individuals have been severe. On February 9, 2026, a Hong Kong court sentenced Jimmy Lai — a 78-year-old British citizen, founder of Apple Daily, and one of Asia’s most prominent advocates for press freedom — to 20 years in prison. It is effectively a life sentence...The State Department called the verdict “an unjust and tragic conclusion” and stated that it “shows the world that Beijing will go to extraordinary lengths to silence those who advocate fundamental freedoms in Hong Kong."
In the letter, Chairman Moolenaar requests the following information from Chairman Warsh:
1. What eligibility criteria — explicit or implicit — govern FIMA Facility participation, and have those criteria been formally reviewed since the facility was made permanent in July 2021?
2. Whether HKMA’s operational role as the hub of the PBOC’s competing RMB liquidity infrastructure raises questions of conflict, information asymmetry, or geopolitical risk that the Board believes warrant examination?
3. Whether the erosion of Hong Kong’s legal and institutional autonomy since 2020 is relevant to the Federal Reserve’s assessment of HKMA’s continued eligibility?
4. What graduated options short of full revocation exist — including enhanced reporting requirements, conditionality, or modified access terms — and whether the Board has considered any of them?
5. What the Board believes the systemic implications of a suspension or modification of HKMA’s FIMA access would be, and over what timeline?
Read the full text of the letter here.