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| No.4 July, 2009 |
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Renminbi Trade Settlement |
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The use of Renminbi in cross border transactions is set to proceed following the signing of a recent supplementary agreement.
The Governor of the People's Bank of China (PBoC), Mr Zhou Xiaochuan, and the Chief Executive of the Hong Kong Monetary Authority (HKMA), Mr Joseph Yam, signed the supplementary Memorandum of Co-operation on June 29.
The document paves the way for the implementation of a pilot scheme for the use of renminbi in settling cross-border trade transactions between the Mainland and Hong Kong.
The PBoC and the HKMA have been working closely on the new scheme, 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. |
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The Financial Secretary, Mr John C Tsang, has welcomed the move.
"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," Mr Tsang said.
"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 added: "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." |
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