How will RMB internationalisation impact Hong Kong's financial industry?

Hong Kong is the largest offshore renminbi market.

With Hong Kong as the largest offshore renminbi market, the local financial industry is poised to be the first and largest beneficiary as the RMB gains momentum in its bid to achieve international currency usage, according to a survey conducted by KPMG. 

As the RMB achieves greater levels of acceptance as a currency for international trade settlement, more than a third (46%) of the surveyed banks indicated that cross-border financing will be the main focus of their RMB business – which is higher than RMB exchange (27%) and loans (18%). 

“Chinese banks in Hong Kong should actively expand and participate in offshore RMB business among non-resident clients, seize the opportunities emerging from the opening up of the capital market in the mainland, and actively engage in major initiatives such as the Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect and the Bond Connect,” said KPMG China Head of Financial Services Assurance Edwina Li. 

KPMG also urged the Hong Kong Monetary Authority to open up and integrate RMB markets between Hong Kong and the Mainland to address the issue of limited offshore RMB funds. This will allow Hong Kong-based Chinese banks to enter and gain access to the Mainland’s inter-bank market to borrow and lend RMB in certain amounts.

“With the advancement of RMB internationalisation and the establishment of Hong Kong as an offshore RMB clearing centre, Chinese banks in Hong Kong will see their market position strengthen and will develop a stronger link with the international financial sector,” added Li.