The Hong Kong Monetary Authority has appointed HSBC to develop and run a real-time US dollar clearing system.
HKMA chief executive Joseph Yam Chi-kwong said the system would allow a wide range of financial transactions in US dollars to be settled domestically - many on a real-time basis - rather than offshore.
'A local US dollar clearing system will bring with it the advantages of speed, convenience and efficiency,' Mr Yam said at a signing ceremony yesterday.
'It will, for example, allow US dollar cheques to be settled within two days, instead of the current two weeks and in addition to these obvious advantages it will also carry the benefit of safety, in the form of reduced settlement risk.' Hongkong and Shanghai Banking Corp chairman David Eldon undertook to make the settlement system available to local users at a price he said would be 'very competitive' compared with tariffs charged by US banks for US dollar clearing services in New York.
But HSBC executives declined to comment on the investment required to make the service available, the price at which transactions would be settled, the volume of business they anticipated, or the point at which the service would become a net contributor to group revenues.
The bank has been appointed as the settlement institution for a period of five years.
The system will be phased in during the course of this year, with US dollar real-time gross settlement payments enabled from August.