Ms Sylvia Yip Senior Manager, Financial Infrastructure Development Division Hong Kong Monetary Authority
Hong Kong’s role in facilitating the use of Renminbi as a currency for settling international transactions
Global Payment Week 2010 Amsterdam 19-22 October 2010
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Cross-border RTGS linkages
Fund Raising Currency Switching
Payment Services Investment
Payments to / From overseas
Payments to / from Mainland
PvP DvP
Hong Kong
• Equity
Ringgit RTGS
Indonesian Rupiah RTGS
Malaysian CSD
Treasury
• Banking • Fund
Clear- stream
Euroclear Mainland South Korea
New Zealand Australia
• Bond • Trade
Regional CHATS
Payment links
PvP
RTGS Real Time Gross Settlement System
CMU Central Moneymarkets Unit
Payment-versus-payment
Delivery-versus-payment DvP
CCASS Central Clearing and Settlement System
HKD RTGS
EUR RTGS
USD RTGS
RMB RTGS CCASS (Equity)
CMU (Bonds & Investment Funds)
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● Maintain a resilient and efficient payment system – Liquidity optimisers – Shortening settlement cycles of bulk clearing items
● Build a multi-dimensional payment infrastructure – Enhancing functionalities of CMU
● Position Hong Kong as a regional payment hub – Regional CHATS – Establishing PvP and DvP links with payment and settlement
systems of other economies – SWIFTNet migration
● Focus on Mainland-related infrastructure – Multi-currency cross-border payment links with Mainland – Enhancements to support RMB trade settlement – Development of bulk settlement run in RMB RTGS system
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Hong Kong
Mainland • Cross border arrangement with foreign
currency payment systems in Mainland China for HKD, USD, EUR, GBP payments
• Payment system linkages and joint cheque clearing with Guangdong Province and Shenzhen
Malaysia • Ringgit/USD PvP and DvP links
developed
Asia Region • Regional CHATS payment
service helps develop HK into a regional correspondent banking centre
Euroclear / Clearstream • User of HK’s USD RTGS system to
settle USD transactions for their Asian clients
Mainland
Malaysia
Taiwan
Europe
Asia
Indonesia • Rupiah/USD PvP link
developed
Indonesia
Taiwan • Taiwan banks being
encouraged to use HK’s payment platform
Dubai
Dubai • Infrastructure co-operation
initiatives being pursued by HK-Dubai Working Group on Financial Infrastructure
Macau
Macau • HKD & USD joint
cheque clearing
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2004 2007 2009 2010 Jun 22nd Jul 19th Aug 17th
Personal Renminbi business
RMB bonds
RMB trade settlement
Extension in areas covered by trade settlement scheme
Extension in overall scope and participa-tion
Investment in Mainland’s interbank bond market
Retail
Capital market
Trade
Wealth management
Mo
re p
lac
es
c
ove
red
Larg
er p
rod
uct s
co
pe
M
ore
pla
yers
Mo
re fl
exi
ble
us
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f fun
ds
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● June 2010: expansion in Renminbi trade settlement – Trade settlement scheme expanded: import and export of goods and services
between 20 municipal cities/provinces in China and the rest of the world
● July 2010: Clearing Agreement revised – FI participants: opened up to all types of financial intermediaries (banks – HK and
overseas, securities & investment houses, asset managers, insurance companies, etc.)
– Product range: banks are free to develop and offer all types of Renminbi products (eg. fx, investment products, wealth management, insurance policy)
– Client coverage: extended to all corporates; overseas banks can provide services to individuals in the overseas markets
– RMB conversion: no restrictions between participants or with clients; conversion with Clearing Bank have to be trade-related, or if otherwise, meeting the Mainland’s requirements
– Two-tier clearing structure: direct participants can offer all types of Renminbi services to other banks and financial institutions
● August 2010: opened up investment channel to participating banks in Mainland’s interbank bond market
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Offshore Renminbi Market in Hong Kong
Renminbi banking
Renminbi capital market
Renminbi FX market
Renminbi insurance
• Deposit – conventional / CDs / currency-linked
• Remittance • Cheque • Bank cards • Trade financing • Loans
• Debt origination • Bond fund • Commodity-linked
products
• Interbank loans market
Pro
duc
ts th
at
exi
st to
da
y Po
ssib
le n
ew
p
rod
uct
• ETF / unit trust / REIT
• Fund management • Equity financing • Structured products • Derivatives
• Reinsurance • Currency swap • Security repo • Short-term papers
• Correspondent banking – corporate & institutional
• Wealth management services
• RMB-denominated insurance policy
Renminbi money market
• FX Option
• Spot FX (can be traded via EBS and Reuters trading platforms)
• FX non-deliverable forward
• FX forward • Position squaring
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Further expansion in overall size of Renminbi balance sheet is expected – a function of customer demand and institutional supply of Renminbi financial products
Source: HKMA and PBoC
RMB bn RMB 158.8 bn
6.8105
0
20
40
60
80
100
120
140
160
180
| 04 | 05 | 06 | 07 | 08 | 09 | 10 0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00 O/S RMB Bonds & Deposits (LHS) USD/CNY (RHS)
End-Aug 2010
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● Currently, 129 banks from Hong Kong and other regions participate in Hong Kong’s Renminbi RTGS system as direct members.
92 banks from HK & Greater China
Asia 17 banks
Europe 14 banks
Americas (2) Oceania (2) South Africa (2)
……more overseas banks and other FIs may join the business directly or via a correspondent bank in Hong Kong
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Renminbi RTGS Platform in Hong Kong
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● SWIFT-based RTGS platform ● Seamless interface with CNAPS (RTGS in Mainland China) ● Linkages between RMB, HKD, USD and EUR RTGS ● Interface with securities clearing and settlement system (CMU)
System Support
Liquidity ● Deposit base ● Financing provided by the Clearing Bank ● Currency swap line between central banks and PBoC ● Interbank money market for participants ● Securities issuance
Legal protection ● Settlement finality offered by Clearing and Settlement Systems Ordinance in Hong Kong
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Deposit
RMB currency exchange
Remittance and trade settlement
RMB cheque and credit card services
Loans
RMB bond issuance and trading
RMB investment products
RMB Services Available to Banks leveraging Hong Kong’s RMB RTGS
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● Offer new range of Renminbi services to corporations and individuals ● Develop business across a broad spectrum of financial intermediaries
Retail
Trade
Wealth management
Capital market
& Treasury
Asset managers
Deposit
FX conversion
Remittance
Individuals Corporates
Trade financing
Cheque
Bank card services
Trade settlement
Correspondent banking
Bond financing
Bond investment
Equity investment
Equity financing Fund
distribution
Fund investment Derivatives
Structured products
Arrangers Insurance companies
Insurance business Financial
Advisory
Business scope
Participants
Loans
Currency swap
Repo
FX Forward
Banks
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Renminbi RTGS System －average daily turnover
Trade settlement flows in the RMB RTGS
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RMB Liquidity Management
Conduct RMB currency exchange with Clearing Bank (BoCHK) for trade settlement
Borrow RMB from Clearing Bank
Conduct RMB interbank money market deals (lend/borrow) and foreign exchange trades with other Direct Participants
Issue RMB bonds in Hong Kong
Invest in RMB bonds and investment products in Hong Kong
Invest in RMB Interbank Bond Market on the Mainland
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Deposits
FX conversion
Interbank borrowing
Borrowing from
Central Bank
Borrowing from CB
Sources of funds Choices of assets
FX
Interbank
Bond
Cash/balance with CB
RMB bonds (HK/Mainland)
Fund management
products
Equity products
Loans & interbank
lending
* Direct Participants can borrow from their central bank if the latter has established a currency swap line with PBoC
Equity
Fund Management
Insurance
Channel
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Allow offshore RMB liquidity to grow
Increase the availability of RMB denominated investment assets
Stimulate offshore RMB loans market
Broaden the scope of RMB services offered by banks
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Li Shu-pui Division Head Financial Infrastructure Development Division
Tel: (852) 2878 1826 Fax: (852) 2878 2226 Email: [email protected]
Financial Infrastructure Department
Lee Kwok Hung Senior Manager Financial Infrastructure Development Division
Tel: (852) 2878 1393 Fax: (852) 2878 7914 Email: [email protected]
Financial Infrastructure Department
Sylvia Yip Senior Manager Financial Infrastructure Development Division
Tel: (852) 2878 1476 Fax: (852) 2878 7914 Email: [email protected]
Financial Infrastructure Department
Clarence Hui Manager Financial Infrastructure Development Division
Tel: (852) 2878 1363 Fax: (852) 2878 7914 Email: [email protected]
Financial Infrastructure Department
