Mainland China and Hong Kong signed an agreement Monday, will cancel the flow and use of RMB in Hong Kong some restrictions, which will enhance the flow of renminbi offshore, also marks the gradual internationalization of the RMB a step forward.
Hong Kong Monetary Authority on Monday released the bulletin said, the agreement will allow Hong Kong to introduce more RMB-denominated investment products, such as insurance and wealth management plans, more customers will be in Hong Kong to open RMB accounts. However, the HKMA has also warned that local banks should be wary of possible money laundering activities and the RMB notes.
Benefited from the mainland and Hong Kong increasingly close trade and economic ties, Hong Kong has been increasing demand for the yuan. According to China’s central bank said that the first six months of this year, the yuan trade settlement totaled 70.6 billion yuan, of which 75% by Hongkong Clearing. This figure compared with the second half of 2009, 3.6 billion yuan increased significantly.
Hong Kong, HKMA Deputy Chief Executive Peter Pang told reporters in Hong Kong, said the revised rules will accelerate the renminbi in Hong Kong inter-bank market, and will open up more channels for RMB financing.
At present, banks can only handle deposits, remittances and trade settlement of RMB transactions simple. BOC Hong Kong (Holdings) Ltd., 2388.HK, is the only yuan clearing bank in Hong Kong.
According to the revised rules, local banks and the Bank of China will be allowed to launch in Hong Kong in RMB-denominated insurance, securities and fund products.
Hong Kong Monetary Authority also said that under the agreement, Hong Kong, between banks or between different accounts of RMB funds transfer restriction will be lifted. The new rules apply to corporate customers and individuals.
However, the Hong Kong Monetary Authority, said the daily RMB 20,000 yuan (2,948 U.S. dollar) has not changed the individual purchase limit. Enterprise customers no limit.
Standard Chartered PLC, STAN.LN Monday said it would soon launch structured investment products, which will be Hong Kong’s retail and wholesale customers in RMB interest payment.
Standard Chartered Group’s head of global markets in Northeast Asia, said Sundeep Bhandari, this is an important step towards the liberalization of the yuan. The Bank believes that the agreement will create a lot of market opportunities, especially for long-term investment, as investors in Renminbi.
Hong Kong plans to become the first renminbi offshore center. Since the 2004 launch of renminbi deposits in Hong Kong has been expanding the scope of RMB business. The mainland and Taiwan central bank last Tuesday agreed to authorize the Bank of China operations in Hong Kong, Taiwan banks to provide RMB cash settlement services to meet the increased demand for the yuan to strengthen economic ties and the requirements of both sides.