In response to a question in the Legislative Council on the increasing competition from other financial centers, the Secretary for Financial Services and the Treasury, Professor K C Chan, has confirmed that the government will continue to promote the services that Hong Kong as a global offshore RMB business center provides for corporates and financial institutions.
Chan pointed out that, with the wider use of RMB in cross-border trade, the demand for RMB financial services from overseas individuals and corporates will increase gradually, and that it is a natural development that overseas financial centers are making efforts to promote RMB business.
However, he said that, along with that competition come business opportunities for banks and financial institutions in Hong Kong. For example, Hong Kong's banks will be allowed more room for developing RMB business with overseas banks, such as the provision of RMB correspondent banking and inter-bank lending services.
With regard to the increasing RMB business in Taiwan, the monetary authorities of the Mainland and Taiwan signed the Memorandum of Understanding on Cross-strait Currency Clearing Cooperation (MoU) in late August last year. It was agreed that the two sides will establish a cross-strait currency clearing mechanism based on the principles and co-operation framework laid down in that MoU, but details of the clearing arrangements have yet to be announced.
The government has also been closely monitoring the development of RMB business in other places (for example, London and Australia), and is promoting co-operation and establishing linkages between these places and Hong Kong's offshore RMB platform, thus furthering Hong Kong's important role as the offshore RMB business center.
He emphasized that Hong Kong has the "first-mover" advantage over other places for launching offshore RMB business. Hong Kong has all along been a platform for mainland China to trade and invest overseas, and, with an increasing number of these transactions being settled in RMB, Hong Kong can have a role to play and can seize the business opportunities that come with it.
Hong Kong is, he stated, the largest and most competitive offshore RMB business center, providing a one-stop service to corporates and financial institutions from different parts of the world. Apart from conducting cross-border trade settlement in RMB, Hong Kong also has the largest offshore RMB liquidity pool and financing market, with a diversified range of RMB-denominated products on offer.
The financial industry and government are actively providing RMB services to overseas financial institutions at the wholesale level. For example, overseas banks have set up over 1,300 RMB correspondent banking accounts with banks in Hong Kong, in order to satisfy their clients' needs for RMB trade settlement and financing through Hong Kong, while Hong Kong's RMB clearing platform has developed into a global RMB payment network with over 200 participating banks, providing efficient and reliable service to more than 30 other places.
Looking ahead, Chan concluded, the government will consolidate and enhance Hong Kong's strengths in various areas and, at the same time, make joint efforts for a win-win situation with other places, by assisting and facilitating financial institutions and corporates around the world to expand their RMB business while promoting the use of Hong Kong's RMB financial platform to settle their transactions.