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)
