The next four to five years will provide Hong Kong with a critical window for it to grow its offshore yuan market, said leading economist Ba Shusong.
That is because the present global economic instability gives China a rare opportunity to promote the internationalisation of its currency.
But one of the major challenges Hong Kong faced in developing its offshore yuan market was a lack of financial innovation and yuan-related products, said Ba, deputy director general of the Financial Research Institute at the State Council's Development Research Centre, a think tank that reports to the cabinet.
'The remaining time for Hong Kong is quite limited - perhaps just four to five years - and then you will see the economy in Europe and the United States stabilise,' Ba said yesterday during a visit to the Chinese Financial Association of Hong Kong. The group includes many major mainland financial firms in the city.
'When the global economy is unstable, the demand for yuan expands greatly. That's why you see many foreign central banks have signed bilateral currency pacts with the People's Bank of China,' he said.
Ba, who often writes economic research papers for top mainland leaders, said Hong Kong should be more confident instead of opposing attempts by other cities - including Shanghai, London and Singapore - to take advantage of yuan-related business opportunities.