Joseph Yam, former chief executive of the Hong Kong Monetary Authority, has called on the city to develop a reliable, regulated and highly transparent multi-currency settlement system to enhance its competitive edge as an offshore renminbi market.
Warning that Hong Kong is losing ground to other cities in the renminbi business, Yam said the city should use its Real Time Gross Settlement (RTGS) system to develop such a platform.
It would be a shame if the RTGS system cannot be used for equity transactions denominated in a currency other than the Hong Kong dollar, the veteran banker told the Hong Kong Economic Journal in an exclusive interview. The system currently enables settlements in the city’s currency, the US dollar, euro and renminbi.
The People’s Bank of China has signed agreements allowing London, Frankfurt, Paris, Luxembourg and Seoul to conduct trade settlement using the Chinese currency. It has also appointed renminbi clearing banks in Taiwan and Singapore.
The central government has unveiled a “through-train” stock trading scheme for individuals in Hong Kong and Shanghai to engage in cross-border equity transactions.
Yam said he expects the scheme, which will debut in October, to boost the liquidity of the Chinese currency in Hong Kong and further improve the depth of the offshore renminbi market in the city.
Hong Kong should explore more opportunities as China steps up the process of liberalizing the capital account of the Chinese currency, Yam added.
Hong Kong dollar peg needs regular review, Yam says
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