According to reports in the regional media, banks licensed to conduct this type of activity in Hong Kong will be allowed to accept deposits, arrange remittances, issue credit and debit cards, and make foreign exchange transactions. However, they will not, initially at least, be able to offer corporate banking services.

Although recent estimates have suggested that there is between Rmb20 billion and Rmb 70 billion circulating in Hong Kong, the jurisdiction's banks have thus far been unable to access the cash due to foreign exchange restrictions and capital controls imposed by the mainland authorities.

Speaking on Tuesday, Hong Kong's chief executive, Tung Chee-hwa welcomed the move, hailing it as a "very important step to consolidate our position as an international financial centre".