Personal RMB service "OKAYED" in Hong Kong

cctv.com 11-26-2003 13:33

In today's policy update, Chinese central government has given the green light for Hong Kong banks to operate personal renminbi banking services starting by the end of this year or early next year. Experts say that the introduction of renminbi business to Hong Kong banks could not have any impact on the exchange rate of the currency, given the comparatively small amount of supply and demand.

Chinese central government has given the green light for Hong Kong banks to provide renminbi banking services to retail customers from early next year. Experts say that this concession to Hong Kong banks will not have any impact on the exchange rate of the currency, given the comparatively small amount of supply and demand.

According to the statement issued by the People's Bank of China, this move is aimed at facilitating trade and personal flows between the mainland and Hong Kong and instituting order in the flow of renminbi to and from the SAR. Local banks in Hong Kong will be allowed to operate four types of services: Deposit taking, exchange, remittance and credit cards.

Dennis D. Zhu, Managing Director of Chairman of Greater China Operating Committee, JPMorgan Chase, said," It is quite a nice small step forward for the convertibility as a direction. The significance of the agreement legitimizes the existing of RMB in Hong Kong, because the RMB has existed in the place, especially in the retail market. Now large banks can be a facilitating agency of that capital flow between RMB and other currency. So it is very helpful for the banks and for the people have businesses in China."

Individuals will be able to convert renminbi into HK dollars and vice versa at participating banks. The maximum amount that can be exchanged per person per day is the equivalent of 20,000 yuan or 2,500 US dollars. Mainland residents can use renminbi-debit cards and credit cards issued by mainland banks for spending in Hong Kong. Participating banks can issue renminbi debit cards and credit cards to Hong Kong residents.

He also said, " Even for the individual component to be done very well, that need the institutional back up. If the bank tales the individual deposit and convert to RMB, the bank will accumulate a large amount of RMB. The bank must have a reliable system to ensure the RMB to be freely converted to other currency, for instance the Hong Kong dollars, which can be guaranteed by the Hong Kong central bank, the Hong Kong Monetary Authority."

Some analysts say the Bank of China (Hong Kong) is most likely to become a clearing banking for yuan-denominated business in the territory. They also dismissed any concern of significant impact on the Hong Kong dollar from possible future moves by some Hong Kong residents to transfer their Hong Kong dollar deposits to their renminbi accounts to seek fatter interest earnings, because the total scale of business is expected to be relatively small.

Editor:Zhang  Source:CCTV.com