The central government has given the green light for Hong Kong
banks to operate personal renminbi (RMB) banking services, the
special administrative region's Chief Executive Tung Chee-hwa
revealed yesterday.
Tung said it is an important step allowing all banks to operate
renminbi services from January.
He said the move is significant and will help maintain Hong
Kong's status as a leading financial center.
The banks are allowed to run four aspects of RMB services namely
deposit-taking, currency exchange, remittances and credit-card
services.
Financial Secretary Henry Tang said the arrangements for banks
to conduct RMB business on a trial basis are important steps
forward for the development of the banking sector.
He said it will help promote economic integration between Hong
Kong and the mainland, and facilitate cross-border tourist
spending.
Monetary Authority Chief Executive Joseph Yam said the move will
open a new channel for the flow of RMB funds between Hong Kong and
the mainland through the banking system.
In the long term, this development will have great significance
for developing Hong Kong as an international financial center, he
said.
With two currencies, "there is a lot that needs to be done to
facilitate the more efficient financial intermediation'' between
Hong Kong and the mainland, said Yam.
"There are very important infrastructural issues and this is a
very good start, a promising start, that will enhance Hong Kong's
status as an international financial center and enable Hong Kong to
play a significant role in financial intermediation involving Hong
Kong and the mainland,'' Yam said.
The initiative could pave the way for Hong Kong to become an
overseas RMB center, once the mainland authorities remove the
control on the capital account of the currency, analysts say.
The mainland, with limited opening-up experience to Hong Kong,
could better prepare itself for what it calls a gradual opening-up
of its capital account, they added.
(China Daily November 19, 2003)