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The Monetary Authority and the People's Bank of China have signed a supplementary memorandum of co-operation in respect of renminbi trade settlement related businesses in Hong Kong.
Welcoming the move Chief Executive Donald Tsang said it shows preparations for using renminbi for cross-border trade settlements have been completed.
The arrangements allow enterprises in Hong Kong and five Mainland cities - Shanghai, Guangzhou, Shenzhen, Zhuhai, and Dongguan - to settle trade in renminbi while banks in Hong Kong can provide related services. The authority will explain implementation arrangements after Mainland authorities announce operational details.
Mr Tsang said the move is significant making the operation of Hong Kong enterprises more flexible as they can use renminbi for trade settlement. The arrangement will also allow Hong Kong banks to extensively expand their renminbi services, increase the local capital liquidity of renminbi, and bolster the currency's clearing platform in Hong Kong.
He said developing renminbi business in Hong Kong is the Government's policy, adding its long-term objective is to develop Hong Kong as a renminbi-clearing centre outside the Mainland.
The pact was signed today by the authority's chief executive Joseph Yam and the bank's governor Zhou Xiaochuan.
Mr Yam hopes the first transaction will be processed in July once the details are confirmed.
"I hope the renminbi business in Hong Kong will continue to develop, consistent with the policy direction of further developing a mutually-assisting, complementary and interactive relationship between the financial systems of the Mainland and Hong Kong," he said.
Financial Secretary John Tsang said the pilot scheme will strengthen the role of Hong Kong as a testing ground for the use of renminbi outside the Mainland and will give Hong Kong enterprises more flexibility in their operations.
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