Joint HK-UK RMB Forum Launched

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

18 January 2012

The Hong Kong Monetary Authority (HKMA) and the United Kingdom Treasury have announced the launch of a joint private-sector forum to enhance cooperation between Hong Kong and London on the development of offshore renminbi (RMB) business.

The forum has been set up following a discussion between Hong Kong’s Chief Executive, Donald Tsang, and the UK Chancellor of the Exchequer, George Osborne, in September 2011 to foster cooperation on development of offshore RMB business. It will focus on exploring synergies by enhancing linkages between Hong Kong and London, specifically regarding clearing and settlement systems, market liquidity and the development of new RMB denominated financial products.

Sponsored by the two governments and comprising representatives from both Hong Kong and London of banks, including HSBC, Standard Chartered, Bank of China, Deutsche Bank and Barclays, the forum may invite representatives of other institutions as appropriate and will meet twice a year, with the first meeting to be held in Hong Kong in May this year.

The Chief Executive said that: "With the support of the Central Government, Hong Kong has developed into a global hub for offshore RMB business. Banks and financial institutions in London are most welcome to make good use of Hong Kong's offshore RMB platform. I am delighted that the private sector is taking this important step to foster cooperation between the two financial centres."

The forum is part of the HKMA's efforts to promote the use of Hong Kong's RMB financial platform by corporates and financial institutions in other financial centres, including London, in developing their offshore RMB business.

For example, the HKMA is also working to extend the operating hours of the RMB Real Time Gross Settlement system in Hong Kong to 15 hours, from 8.30am to 11.30pm (Hong Kong time) by end-June 2012. This will give financial institutions in London, and other financial centres in the European time zone, an extended window to settle offshore RMB payments through the Hong Kong infrastructure.

The Chief Executive of the HKMA, Norman Chan, added that: "By establishing appropriate linkages with Hong Kong's offshore RMB platform, banks in different parts of the world will be able to provide a comprehensive range of RMB banking and financial services to meet the rapidly increasing demand of their customers. Hong Kong and London are well placed to develop offshore RMB business and closer cooperation between the two financial centres will bring about mutual benefits and a win-win situation."

The UK Treasury considers that deepening cooperation with Hong Kong is an important part of realising London’s ambitions as the leading western RMB hub, because of Hong Kong’s unique role as a gateway into Mainland China’s ‘onshore’ RMB market. The UK already handles almost 30% of all RMB foreign exchange trading.

"London and Hong Kong are uniquely placed to assist in the development of the offshore RMB market,” pointed out George Osborne, "and, further to last summer's agreement, I am delighted that the financial services industries in both financial centres are working together to achieve this goal."

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