The Hong Kong Monetary Authority today announced the People's Bank of China's decision to appoint Bank of China (Hong Kong) Limited as the clearing bank for renminbi business in Hong Kong for a three-year term.

HKMA Acting Chief Executive Norman Chan welcomed the appointment.

"With its considerable experience in clearing and cross-border businesses, the Bank of China HK is well placed to launch a reliable and efficient renminbi clearing service for Hong Kong banks in the very near future," he said, adding that the authority would work closely with the People's Bank of China and the Bank of  China to help with the launch, in phases, of the personal renminbi business by Hong Kong banks.

Chief Executive Tung Chee-hwa announced on November 18, 2003 that, following approval from the State Council, the People's Bank of China had agreed to provide clearing arrangements for personal renminbi business in Hong Kong. It would include deposit-taking, exchange, remittances and renminbi cards.

The major responsibilities of the clearing bank are to:

* open renminbi settlement accounts for participating banks for the acceptance and withdrawal of renminbi funds;

* open a settlement account with the People's Bank of China's Shenzhen sub-branch to centralise the acceptance and withdrawal of the renminbi funds of the clearing bank and participating banks;

* collect and distribute renminbi banknotes;

* provide clearing services for renminbi remittances and renminbi cards issued by Hong Kong banks; and

* provide services for the participating banks to square their renminbi open positions that result from the exchange of renminbi into Hong Kong dollars and vice versa.

The People's Bank of China will consult the authority and conduct regular appraisals in relation to the clearing bank's services.