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Following is a question by the Hon Jeffrey Lam and a written reply by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, in the Legislative Council today (July 5):
Question:
The Hong Kong Monetary Authority (HKMA) and the People's Bank of China held a seminar in Beijing earlier to explore ways for reforming China's financial system and enhancing its financial services under the country's Eleventh Five-Year Plan. In this connection, will the Government inform this Council;
(a) as the Governor of the People's Bank of China has advised that subject to further enhancement of cross-border cooperation in financial infrastructure, the renminbi (RMB) business in Hong Kong is expected to expand within this year, including settlement of cross-border trading transactions, of the supporting measures the Government will implement to complement the enhancement of cooperation between the two places in this respect; and
(b) as the Chief Executive of HKMA has advised that the financial infrastructure of Hong Kong, including its transaction, payment, clearance and custodian systems, allows multi-dimensional participation at the wholesale, retail, international and local levels both directly and indirectly through intermediaries, whether the Government has any plans to encourage the participation of all parties concerned; if so, of the details?
Reply:
Madam President,
With regard to payment and settlement arrangements in Hong Kong, the HKMA is actively promoting the development of a multi-currency, multi-product payment and clearing platform. The aim is to develop Hong Kong into a payment and clearing hub for the region and a prime location for financial intermediation between the Mainland and the rest of the world.
(a) Following the approval by the People's Bank of China on November 1, 2005 for the gradual expansion of renminbi banking business in Hong Kong, the Bank of China (Hong Kong), the clearing bank for renminbi business in Hong Kong, launched the Renminbi Settlement System (RSS) with the support of the HKMA on March 6, 2006. The RSS supports the existing scope of the renminbi business in Hong Kong. Should the need arise in future, the system can be upgraded, within about five weeks, into a fully fledged Real Time Gross Settlement (RTGS) system with the same payment and clearing capabilities as the existing Hong Kong dollar, US dollar and Euro RTGS systems.
(b) The HKMA is actively developing various forms of financial infrastructure and has launched several initiatives at the institutional and retail levels, including the RTGS Liquidity Optimiser and Central Moneymarkets Unit (CMU) Bond Price Bulletin. To promote Hong Kong as a regional payment and clearing hub, the HKMA has also devised marketing plans and will work closely with settlement institutions, central banks and industry associations, in organising various marketing activities. These include seminars, technical discussions and specialised programmes targeting specific user groups. The aim is to promote the use of our financial infrastructure by financial institutions in Hong Kong, the Mainland and the Asian region. These efforts have already met with some success. The link between Malaysia's Ringgit RTGS system and Hong Kong's US dollar RTGS system is scheduled to go live later this year and the foreign currency leg of some foreign exchange transactions on the Mainland is now being settled in Hong Kong.
Ends/Wednesday, July 5, 2006
Issued at HKT 12:05
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