HONG KONG, Jan. 11 (Xinhua) -- Monetary Authority Chief Executive Joseph
Yam Thursday hailed the Central Government's decision to expand Renminbi (RMB)
business in Hong Kong, adding that the move is a milestone for RMB entering the
international arena.
The State Council agreed Wednesday to extend clearing and settlement
arrangements for RMB business carried out by local banks in Hong Kong to cover
funds raised in the city by mainland financial institutions through the issuance
of RMB-denominated financial bonds.
Yam told reporters the decision has strategic importance as Hong Kong is
the first place where mainland financial institutions can issue RMB-denominated
financial bonds.
If Hong Kong's Real Time Gross Settlement System is extended to cover RMB,
Yam said the system will be unique in the world, covering four denominations -
RMB, Euro, US and Hong Kong dollars, adding that this will be crucial to Hong
Kong's status as an international financial hub.
The People's Bank of China said it will offer corresponding clearing
arrangements for mainland financial institutions issuing RMB financial bonds in
Hong Kong. The technical preparations are underway and the business will be
introduced after the relevant preparation work is completed.
The new business will widen the channels for RMB held by the Hong Kong
households and enterprise to flow back to the mainland, thereby contributing to
the development of economic activities between the mainland and Hong Kong, and
strengthening Hong Kong's status as an international financial center.
The move will also increase new market participants and bonds currencies,
helping to expand the Hong Kong banks' asset scope and the choices for
RMB-denominated investment by Hong Kong households and enterprises.
Since RMB business was launched in Hong Kong in early 2004, all kinds of
business have grown in a stable manner, with a smooth channel for fund
settlement and orderly flowing back of RMB.
At the end of November last year, 38 banks in Hong Kong had started to
participate in RMB business. The outstanding RMB deposits in Hong Kong amounted
to 22.8 billion yuan (2.9 billion U.S. dollars) and the remittance to the
mainland from Hong Kong was 2.2 billion yuan (282.1 million U.S. dollars).
The use of mainland bank cards for consumption and cash withdrawal in Hong
Kong reached 20.6 billion yuan (2.64 billion U.S. dollars), and the use of Hong
Kong bank cards for consumption and cash withdrawal in the mainland registered
750 million yuan (96.15 million U.S. dollars). The use of Hong Kong cheques in
the mainland stood at 12.82 million yuan (1.64 million U.S. dollars).
