Renminbi Trade Settlement
In June, Chief Executive of the Hong Kong Monetary Authority (HKMA), Joseph Yam, and Governor of the People’s Bank of China (PBoC), Zhou Xiaochuan, signed a supplementary Memorandum of Cooperation to prepare for the implementation of the pilot program for the use of renminbi in settling cross-border trade transactions between the Mainland of China and Hong Kong.
The PBoC and the HKMA have been working closely on the implementation of the pilot program, including the related arrangements for the cross-border settlement and clearing of renminbi funds and amendments to the existing legal documents such as the clearing agreement for renminbi business in Hong Kong. Once the relevant administrative rules on the Mainland are promulgated, banks in Hong Kong will be able to provide related services to enterprises using renminbi to settle trade transactions with their counterparts on the Mainland.
Hong Kong Financial Secretary, John C Tsang, welcomed the implementation of the pilot program, saying: “Allowing trade transactions between the Mainland and Hong Kong to be settled in renminbi will not only strengthen the role of Hong Kong as a testing ground for the use of renminbi outside the Mainland, but is also conducive to trade activities and economic development in the two places. This will also provide Hong Kong enterprises with more flexibility in their operations, and is complementary to the policy initiatives of the government to assist them in withstanding the impact of the international financial crisis.”
Mr. Yam said, “With the implementation of the pilot scheme, there will be a further diversification of renminbi business in Hong Kong. This will help enhance the capability of Hong Kong’s financial system in handling financial transactions that are denominated in renminbi.
“I hope that renminbi business in Hong Kong will continue to develop, consistent with the policy direction of further developing a mutually-assisting, complementary and interactive relationship between the financial systems of the Mainland and Hong Kong. This is of strategic importance to both the Mainland and Hong Kong.”
HONG KONG ECONOMIC AND TRADE OFFICE IN WASHINGTON D.C.
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