Financial Secretary Henry Tang says the further expansion of renminbi services will enhance Hong Kong's position as an international finance centre.

He hopes for an early implementation of the initiatives, which include allowing Hong Kong importers to settle direct import trade from the Mainland in renminbi, and allowing financial institutions on the Mainland to issue renminbi financial bonds in Hong Kong on a pilot basis.

Speaking after the Mainland, Hong Kong & Macau Trade & Economic Co-operation Forum today, Mr Tang said any renminbi services that are outside the Mainland are a bold liberalisation. Noting the issues involved are complicated, he said discussion with the People's Bank of China is on-going.

Detailed arrangements

Monetary Authority Chief Executive Joseph Yam said the Mainland and Hong Kong have different concerns on the issues and time is needed for working out the detailed arrangements. It is a complex exercise and is difficult to tell when the new measures will be put in place, he added.

As an international financial hub, Mr Yam said Hong Kong's financial system must be able to handle transactions in renminbi - the currency of domestic savings and fund-raising on the Mainland.

He expected that the renminbi will become a significant currency not only in the region, but also in the world as the Mainland's economy is growing in global importance. Hong Kong can be used as a testing ground in the process of the Mainland's financial liberalisation and a way for renminbi to be channeled back to the Mainland.

Mr Yam said there is a need to manage risks in financial liberalisation, and the expansion of renminbi business in Hong Kong should be progressive.

3 directions

The three strategic directions for further development of renminbi business will assist the repatriation of renminbi back to the Mainland and the diversification of renminbi assets.

The strategies are:

* exploring the diversification of the renminbi assets and liabilities of Hong Kong banks;

* exploring the provision of appropriate renminbi banking services for trade and other current account transactions between Hong Kong and the Mainland; and,

* exploring the feasibility of establishing a renminbi debt issuance mechanism in Hong Kong.