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The following is issued on behalf of the Financial Services Development Council:
The Financial Services Development Council (FSDC) today (April 29) released a report entitled "Recommendations for capitalising on the unique advantages of Hong Kong in the process of Renminbi (RMB) capital account convertibility", which reviews the progress and goals of RMB internationalisation and proposes measures to help Hong Kong position itself and leverage its unique advantages during the process.
The Chairman of the FSDC, Mrs Laura M Cha, said, "Since the launch of the pilot scheme for RMB cross-border trade settlement in 2009, the internationalisation of RMB has progressed rapidly. RMB capital account convertibility has been further accelerated after the International Monetary Fund announced in November 2015 the inclusion of RMB in its Special Drawing Rights currency basket with effect from October 2016."
Noting that in the 13th Five-Year Plan, the Central Government proposed to raise the position and role of Hong Kong in the country's economic development and opening, Mrs Cha pointed out that during the next stage of the Mainland's development of an open economic system, attainment of convertible capital accounts in a stable and orderly manner and internationalisation of RMB, Hong Kong still needs to continue its role as the largest offshore RMB centre.
"At the same time, Hong Kong should make use of its special advantages in different aspects including financing, market channels, trading, payments and clearing, legal arbitration, consulting, research and asset management to play its role as an international financial centre," said Mrs Cha.
The report notes that during the process of the internationalisation of RMB, Hong Kong has played a special role and by leveraging on its advantages has developed into the most important offshore RMB centre. However, with the "offshore market plus clearing bank" model developing in Europe, North America and other parts of the world, Hong Kong will face challenges under the new landscape and its unique competitive edge as the first mover in offshore RMB businesses will no longer be obvious. The launch of the Cross-border Interbank Payment System by the People's Bank of China (PBoC), the opening up of RMB capital accounts and the development of free trade zones in China may also weaken the role of Hong Kong in cross-border RMB payment and clearing services and its traditional advantages as an offshore market. Nevertheless, the continued opening up of the Mainland's financial sector and the further progress of RMB capital account convertibility, coupled with the "going global" of the Mainland enterprises and the Belt and Road Initiative, will continue to offer huge development opportunities for Hong Kong.
The report proposes that the Hong Kong Special Administrative Region Government and the relevant regulatory authorities should communicate and co-operate closely with relevant Mainland authorities to help foreign central banks build, maintain and manage their RMB reserve asset portfolios through Hong Kong; to proactively promote Mainland entities such as the Ministry of Finance to issue RMB bonds in Hong Kong to meet foreign central banks' demands for RMB reserves assets; and to strive for the issue of central bank papers by PBoC in Hong Kong. The report also sets out a number of policy recommendations for strengthening Hong Kong's position as a pivotal hub for offshore RMB businesses and as an international asset management centre, so as to help Hong Kong fully capitalise on its advantages in connecting East and West and further enhance and expand the relevant services to the Mainland financial markets.
The full report has been uploaded to the FSDC website: www.fsdc.org.hk.
About the FSDC
The Hong Kong Special Administrative Region Government established the FSDC in 2013 as a high-level, cross-sectoral advisory body to engage the industry in formulating proposals to promote the further development of Hong Kong's financial services industry and to map out the strategic direction for development.
The FSDC has set up five committees, namely the Policy Research Committee, the Mainland Opportunities Committee, the New Business Committee, the Market Development Committee and the Human Capital Committee, as the five streams of its work.
Ends/Friday, April 29, 2016
Issued at HKT 17:13
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