FINANCIAL SERVICES | Staff Reporter, Hong Kong

Hong Kong and China strike deal on Renminbi business

Cooperation eliminated restrictions on Hong Kong banks in establishing renminbi accounts for financial institutions.

Chief Executive of the Hong Kong Monetary Authority (HKMA), Mr Norman Chan, and Deputy Governor of the People's Bank of China (PBoC), Ms Hu Xiaolian, signed a Supplementary Memorandum of Co-operation on Monday on the expansion of the renminbi trade settlement scheme as announced in a Hong Kong Monetary Authority report.

Following the expansion of the renminbi trade settlement scheme, the HKMA and the PBoC have agreed to strengthen co-operation and further promote Hong Kong's status and role as a renminbi market platform in the process of developing renminbi business outside the Mainland. This is a milestone in the development of offshore renminbi business in Hong Kong and a very crucial step in the implementation of the two guiding principles set out in the HKMA circular issued in mid-February.

The PBoC and the Renminbi Clearing Bank, Bank of China (Hong Kong) Limited, also signed a revised Settlement Agreement on the Clearing of Renminbi Businesses on Monday.

Mr Chan, said, "Following the revision of the Settlement Agreement, there will no longer be restrictions on banks in Hong Kong in establishing renminbi accounts for and providing related services to financial institutions; and individuals and corporations will be able to conduct renminbi payments and transfers through the banks. I expect that many more types of financial intermediary activities denominated in the renminbi will be introduced in the market, helping Hong Kong's renminbi business platform leap to new heights."

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