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Financial and Monetary Affairs
Global Offshore RMB Business Hub
With the continued internationalisation of the Renminbi (RMB) and the opening up of the Mainland financial markets, the currency is increasingly used in global transactions, ranging from cross-border trade and direct investment transactions to financial investment and asset management activities.
Thanks to its deep pool of liquidity, efficient financial infrastructure and multitude of cross- border portfolio flow channels, Hong Kong continues to be the largest and most important global offshore RMB business hub, offering a wide range of RMB-denominated investment products, including listed and unlisted investment funds, insurance products, currency futures, Reits, shares, derivatives products and bonds. As at end-2017, total RMB deposits, including customer deposits and outstanding certificates of deposit, amounted to RMB618.4 billion.
Hong Kong is the global leader in RMB financial intermediation activities. In 2017, according to statistics from the Society for Worldwide Interbank Financial Telecommunication, over 70 per cent of offshore RMB payments were handled by Hong Kong. The city's RMB real-time gross settlement (RTGS) system also recorded a high volume of RMB transactions, averaging RMB900 billion daily during the year.
International Banking and Payment Centre
Hong Kong was the world's sixth and Asia's second largest banking centre in terms of external positions2, according to the Bank for International Settlements Quarterly Review for end-2017.
International financial institutions maintain a strong presence in Hong Kong. Of the world's top 100 banks, 75 operate in the city. At the year end, 148 of the 155 licensed banks in Hong Kong were beneficially owned by parties outside Hong Kong.
Hong Kong has robust RTGS interbank payment systems. All banks in the city maintain settlement accounts with the Hong Kong Monetary Authority (HKMA) in the Hong Kong dollar (HKD) RTGS system3. The US dollar (USD), euro and RMB RTGS systems enable transactions in these currencies to be settled in real time among banks. All four RTGS systems are linked to enable foreign exchange (forex) transactions to be settled on a payment-versus-payment basis.
The HKMA's Central Moneymarkets Unit (CMU) provides clearing, settlement and custodian services for Exchange Fund Bills and Notes (EFBNs), government bonds and other HKD or foreign currency public and private debt securities. It is linked to a number of international and regional central securities depositories (CSDs) to enable overseas and local investors to hold and settle securities lodged with the CMU and with overseas systems respectively. In July, Bond Connect, a new initiative for mutual access between the Hong Kong and Mainland bond markets, was launched, starting first with northbound trading, which facilitates overseas. investors investing in the Mainland bond market. Bond Connect transactions are settled using
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Sum of liabilities to banks and non-bank customers outside Hong Kong and claims on banks and non-bank customers outside Hong Kong, such as equities, securities and capital instruments.
Banks may obtain intra-day and overnight liquidity through repurchase agreements with the HKMA using Exchange Fund Bills and Notes and government bonds as collateral.
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