Transcript of CE's remarks (with photo/video)

Transcript of CE's remarks (with photo/video)
*********************************************

     Following is the transcript of remarks (English portion) by the Chief Executive, Mr Donald Tsang, on RMB-denominated Trade Settlements today (April 9):

Chief Executive: I warmly welcome the State Council's decision yesterday to introduce a pilot programme for using RMB for cross-border trade settlements.  We, in Hong Kong, have completed the necessary technical preparations for becoming the first place outside the Mainland to benefit from the scheme.  Both our financial industry and trade between the two places will benefit immensely from this breakthrough.

     The close trade partnership between Hong Kong and the Mainland has laid a solid foundation for developing RMB-denominated transactions. Enterprises in Hong Kong will soon be able to settle trades in RMB through the banks with the mainland companies in the pilot scheme. The scheme will cover import, export as well as re-export.

     The new scheme is significant in three aspects:

     First, it enables enterprises to manage flexibly and thus reduce the risks arising from fluctuations in exchange rate. This comes as a timely and pragmatic improvement to the business environment in which mainland and Hong Kong importers and exporters operate.

     Second, the initiative will bring about new business for the banking sector in Hong Kong. The banks are set to provide Hong Kong enterprises with RMB services over a wide range. That means the banks can expand extensively their RMB services from individual clients to enterprises.

     Third, the scheme will enhance the diversity of RMB assets in the Hong Kong banking system; increase the local capital liquidity of the yuan; and bolster the RMB clearing platform in Hong Kong. These developments will pave the way to further promote RMB businesses in Hong Kong.

     In summary, the State Council's decision yesterday will facilitate Hong Kong as a regional RMB clearing centre and underpin our position as an international financial hub.

     We now stand ready. The scheme will commence once the relevant Mainland authorities have come up with the operational details.

     Thank you very much.

Reporter: What does this mean for Hong Kong's economy and is there going to be any change of position on the Hong Kong dollar?

Chief Executive: First of all, this arrangement will strengthen our banking system. Give them new business opportunities. It will also give enormous security for the trading entities in Hong Kong. Enterprises doing import, export and trading will be able to make use of RMB resources. Therefore, it provides a greater security in this particular time of need. And definitely will then create more jobs for Hong Kong. This will have nothing to do with Hong Kong linked exchange rate with US dollar which has been an anchor of Hong Kong's financial stability.

(Please also refer to the Chinese portion of the transcript.)

Ends/Thursday, April 9, 2009
Issued at HKT 10:14

NNNN