Print

Mail

wiki links

China considers HK yuan center

A Chinese teller counts 100 yuan notes at a bank in Shanghai yesterday. PHOTO: REUTERS

China is considering proposals for the setting up of an offshore yuan center in Hong Kong by the end of the year, it was reported yesterday.

The arrangements to set up an offshore yuan trading center in Hong Kong are expected to be worked out before the end of the year, the China-backed Wen Wei Po said, citing unidentified authoritative sources.

The sources said a study on the proposals by concerned departments in the central bank, the People's Bank of China, and the China Social Sciences Academy will be completed this month and submitted to the government for consideration.

There have been increased calls recently for an offshore center to be set up in Hong Kong in view of the influx of Chinese visitors to the city following the recent relaxation of China's travel rules, which allows mainlanders to visit the city individually instead of joining tour groups.

Last week, financial authorities in China and Hong Kong signed a memorandum of understanding (MOU) for the sharing of supervisory information and cooperation in banking supervision.

Meanwhile, HSBC Holdings unit Hang Seng Bank said in a report that local banks should be allowed to operate yuan note deposit accounts as a first step in developing Hong Kong into an offshore center for yuan financial transactions.

In doing so, the Chinese government could follow US practice and limit such deposit services to non-mainland residents so as to minimise any risk of huge outflows, the bank said in its newsletter.

It said an official channel for repatriating yuan notes in Hong Kong to the mainland is needed as the number of visitors from China has surged recently after restrictions on individual travel to the territory have been relaxed.

If authorised banks in China could offer settlement services and interest-bearing accounts for Hong Kong banks, the city's banks could then pay interest on their yuan deposit accounts.

It said that provision of other yuan financial business services in Hong Kong, including loans and foreign exchange trading, which will eventually turn the territory into a full-fledged offshore yuan center, will be dependent on China's timetable for relaxing its capital controls.
This story has been viewed 1542 times.