Monetary Authority Chief Executive Joseph Yam says although the label "offshore financial centre" has been used in relation to the conduct of renminbi business in Hong Kong, the term is inappropriate.

In his latest Viewpoint article posted on the authority's website today, Mr Yam said within the international financial community the label "offshore financial centre" should be avoided.

He said there has been discussion in the Financial Stability Forum, established by the G10 governments soon after the 1997-98 financial turmoil, about the need for offshore financial centres to upgrade their supervisory and disclosure standards.

Model city

Unfortunately, Hong Kong has been included in the forum's list of offshore financial centres, although the city tops the list as a model for others to follow.

"But the label is irksome in that, simplistically, offshore financial centres are considered as those thriving on financial activities that cannot be conducted onshore for regulatory reasons," he said.

"While, as one of a few non-G10 members of the Financial Stability Forum, I have been pressing for Hong Kong to be taken off the list, sometimes that label has been used in relation to the conduct of renminbi business in Hong Kong. It is important to note that we are not seeking to engage in regulatory arbitrage."

International status

Mr Yam said Hong Kong's regulatory standards are of international status and there are no opportunities for regulatory arbitrageurs.

"What we are angling for is both to serve as the testing ground for financial liberalisation for the renminbi and to position ourselves in capturing a significant share of renminbi financial business (certainly the lion's share of the international aspect of that business) in Hong Kong as liberalisation progresses.