ENG-2015 — Page 92

4

Financial and Monetary Affairs

Largest Offshore RMB Centre

Amid the further internationalisation of RMB, the currency has been increasingly used in cross- border transactions, investment, financing and asset management. Hong Kong continues to be the world's leading and largest offshore RMB business hub, with the world's largest pool of offshore RMB funds and the widest variety of RMB-denominated investment products.

At the end of 2015, total RMB deposits, including customer deposits and outstanding certificates of deposit, stood at RMB1,010.4 billion. Apart from the sizeable liquidity pool, Hong Kong offers a wide range of products, including listed and unlisted investment funds, insurance products, currency futures, real estate investment trusts, shares and derivatives products.

Following the launch of the Shanghai-Hong Kong Stock Connect in November 2014, the Mainland-Hong Kong Mutual Recognition of Funds Arrangement was implemented in July 2015, further deepening mutual access between the Mainland and Hong Kong capital markets, enriching the range of RMB-denominated investment products in Hong Kong and promoting the internationalisation of RMB.

RMB Deposits and RMB Certificates of Deposit

Chart 5

1,400

1,200

1,000

1,158

RMB Billion

1,053

1,010

800

600

720

662

400

200

0

2011

2012

2013

2014

2015

Year

International Banking and Payment Centre

Hong Kong was the world's seventh and Asia's second largest banking centre in terms of external positions' in the Bank for International Settlements Quarterly Review for the end of

2015.

International financial institutions maintain a strong presence in Hong Kong. Of the world's top 100 banks, 74 operate in the city. At the year end, 150 of the 157 licensed banks in Hong Kong were beneficially owned by parties outside Hong Kong.

The interbank money market is well established. Hong Kong dollar (HKD) wholesale deposits are traded actively among local authorised institutions (Als), and between local and overseas Als, recording an average daily turnover of $276.5 billion in 2015.

1

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.

60