Lenders may soon be allowed to offer domestic services in the mainland currency
Mainland authorities are considering allowing Hong Kong lenders to provide personal yuan banking services to Hong Kong residents in an extension of the Closer Economic Partnership Arrangement, it was revealed yesterday.
Chief Executive Tung Chee-hwa said local banks were expected to be able to offer deposit-taking, remittances, foreign exchange and credit card services denominated in yuan on a trial-run basis, subject to approval from the mainland authorities.
After attending a trade fair, Mr Tung also said Hong Kong would be given fast-track access when China liberalised its capital controls to allow for the creation of offshore yuan centres.
The Hong Kong Monetary Authority (HKMA), has been charged with ironing out the details of the proposal once mainland authorities give the go-ahead. Its chief executive Joseph Yam Chi-kwong yesterday said the proposals were still at a 'preliminary stage'.
After a meeting with the Hong Kong Association of Banks (HKAB), Secretary for Financial Services and the Treasury Frederick Ma Si-hang said yesterday no timetable had been set for the proposals' implementation. Hong Kong banks had not been allowed to accept yuan deposits or engage in yuan business outside China. The mainland government also imposes strict controls on the country's capital accounts.
Therefore, a key issue that would need to be solved is how yuan deposits in Hong Kong banks would be remitted to China.
