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As part of China's goal to encourage the use of the yuan as a global
currency, Hong Kong is on track to become an offshore yuan center by 2020 with
more investment options in the pipeline to boost the status of the currency,
economists said.
"There's a large room for further development of the yuan business in Hong
Kong despite the inconvertibility of the yuan," said Liao Qun, chief economist
at CITIC Bank International.
Yuan-backed deposits, bonds, and cross-border trade settlement are available
in Hong Kong.
The yuan business has been rising since February 2004 when China allowed
banks in Hong Kong to offer yuan deposits, remittance and conversion for Hong
Kong residents. The appreciation of the yuan since July 2005 has also added to
the currency's popularity overseas due to higher investment returns.
Data from the Hong Kong Monetary Authority showed there are about 80 billion
yuan (US$11.8 billion) in yuan deposits in the special administrative region and
economists said they expect the figure to grow to 200 billion yuan by the end of
this year.
The expansion of cross-border trade yuan settlement is widely expected to
boost yuan holdings in Hong Kong.
In late June, China expanded the yuan settlement to 20 provinces or
municipalities from Shanghai and Guangdong Province to bolster the currency as
an international one.
The central government has introduced several initiatives to develop the yuan
business in Hong Kong. In 2009, China allowed the Chinese mainland subsidiaries
of Hong Kong banks to issue yuan bonds in the SAR. Last year, the Ministry of
Finance issued 6 billion yuan of sovereign bonds in Hong Kong, the first time an
issue has been made in an overseas market.
At the Lujiazui Forum calls were made for more instruments to quicken the
pace of the yuan's global status. |
