The arrangement for the exchange, supply and repatriation of renminbi cashnotes with Taiwan will be conducted through the renminbi platform in Hong Kong, with the Hong Kong renminbi clearing bank as the intermediary, said the Hong Kong Monetary Authority (HKMA) on Tuesday.

The RMB clearing bank in Hong Kong will provide RMB cashnote exchange and related services to the Hong Kong branches of eligible Taiwan commercial banks as determined by Taiwan.

These commercial banks' head offices in Taiwan will then provide RMB cashnote exchange services to other authorized financial institutions in Taiwan, for the purpose of serving personal customers locally.

On Tuesday, the People's Bank of China (PBOC), or the central bank, announced that it has authorized the Bank of China (Hong Kong) Limited to provide RMB cashnote clearing service to Taiwan.

To facilitate the operations, the PBOC and the HKMA also signed a memorandum of cooperation on Tuesday. The RMB clearing bank in Hong Kong will also sign a settlement agreement with the Hong Kong branch of the relevant commercial banks soon, said the HKMA.

Welcoming the arrangement, financial secretary of the government of the Hong Kong SAR John Tsang said Hong Kong's established RMB clearing platform was providing a practical arrangement to facilitate cross-strait cooperation on monetary management.

"This also underscores that Hong Kong, as a leading international financial center in the region, can play an important role in and contributes further to cross-strait financial cooperation and development," he said.