84 Financial and Monetary Affairs
MPF system. The Mandatory Provident Fund Schemes (General) (Amendment) Regulation 2006 came into operation in December 2006 to, inter alia, improve operation of the investment regulation. Further proposed amendments covering issues such as scheme administration and enforcement are being worked on for introduction into the legislature in 2007.
To further improve the disclosure of information on MPF funds, the MPFA conducted a consultation on proposals to improve the content of annual benefit statements. Preliminary work has also started on the development of a comparative platform for MPF funds, focusing on fees and charges.
Financial Links between Hong Kong and the Mainland
Hong Kong has long served as an international financial centre for the Mainland, facilitating Mainland enterprises to access international capital through its banking, equity and debt markets. Hong Kong's banks have also maintained a strong presence on the Mainland. The financial links between Hong Kong and the Mainland have been further strengthened with China's accession to the World Trade Organisation, which will, over time, generate increasing demand for a wide range of financial support services for the increasing trade and investment flows between the Mainland and the rest of the world.
The smooth and orderly development of renminbi business facilitates cross- boundary tourist spending in Hong Kong and helps promote economic integration between Hong Kong and the Mainland. Further development of renminbi business is expected to enhance the capability of Hong Kong's financial system to handle renminbi transactions, which is an important step in strengthening the status of Hong Kong as an international financial centre.
There has been a steady flow of cross-boundary funds among financial institutions in both places. Over the years, the Mainland has accumulated a substantial amount of funds in Hong Kong dollars from trading activities and inward investment. These funds are placed with financial institutions on the Mainland and are subsequently channelled back to Hong Kong through the inter-bank market.
By the end of 2006, Als' external liabilities to financial institutions on the Mainland amounted to $292.4 billion, while their claims on financial institutions on the Mainland totalled $287.4 billion. The amounts represented 16.0 per cent and 7.4 per cent, respectively, of Als' total liabilities to and claims on banks outside Hong Kong.
The use of cross-boundary links with Guangdong Province and Shenzhen rose considerably in 2006, reflecting increasing economic integration between the Mainland and Hong Kong. The daily average turnover of cross-boundary links (RTGS in Hong Kong dollars and US dollars; cheques in Hong Kong dollars, US dollars and renminbi) increased by 30 per cent to the equivalent of over $1 billion in 2006.
In light of the potential of the fund management industry on the Mainland, Hong Kong-based fund managers, who are recognised for their knowledge and experience in asset management, have successfully established joint-ventures with