China Ready To Dicuss Yuan Exchange In Hong Kong

by Mary Swire, Tax-News.com, Hong Kong

12 August 2003

According to reports from the territory this week, Chinese banking officials and experts from the financial sector are due to meet in Hong Kong later in the month to discuss the possible establishment of a yuan exchange in the city.

The delegation is to be led by the director of the Chinese Academy of Social Sciences, who will be accompanied by officials from the People's Bank of China, the China Banking Regulatory Commission, and the China Securities Regulatory Commission. The Chinese delegates are set to discuss the issue with their Hong Kong-based counterparts at a meeting on August 25, Channel News Asia reports.

The yuan is the second largest currency circulating in Hong Kong, and it has been estimated that there is 50 to 70 billion yuan (US$6 billion to US$8.5 billion) circulating in the territory.

The announcement follows reports last week that HKEx is considering offering securities and derivatives in yuan-denominated forms when banks eventually get the official go-ahead to deal in the Chinese currency.

"HKEx will study what kind of products and services the exchange can offer after banks in Hong Kong are allowed to conduct personal yuan business, chief executive Paul Chow revealed following a seminar last week. However, he conceded, "we need a longer period of time to study such a plan, which is also dependent on the schedule for implementation of personal yuan business."

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