With the number of mainland visitors soaring, it is likely to be a case of one city, two currencies Yu Pang-chun likes to remind people that his stores started accepting renminbi much earlier than most other retailers in Hong Kong. Mr Yu, director of the Yue Hwa chain of stores selling Chinese products, said his was the first department store to start taking renminbi in Hong Kong, shortly after the handover in 1997. 'Actually, mainland tourists had been coming to us way before the handover,' said Mr Yu, who is also chairman of the Hong Kong Retail Management Association. Even in the 1970s, he said, mainlanders would come to his store trying to buy items using renminbi. His decision to accept renminbi appears to be a no-brainer - for those with the full benefit of hindsight. More and more, it seems Hong Kong is becoming a case of one city, two currencies as the number of mainland visitors coming here keeps on growing. This seems likely to accelerate after banks in Hong Kong start offering some yuan-denominated services in a few weeks. Starting Thursday, Hong Kong banks will be allowed to offer renminbi services in four areas: bank accounts, remittances, exchange transactions and credit cards. HSBC said last week that it would start offering renminbi deposits starting mid-January, followed by remittances and exchange. Credit cards will come later. Hang Seng Bank is also keen to get a piece of the business. 'We are planning to launch renminbi services [but] I can't tell you the exact time,' said Cecilia Ko Yuk-kwai, a Hang Seng spokeswoman. 'I don't think it will take too long,' she said, adding that there has been a lot of demand for exchange services in particular. Standard Chartered Bank also said it plans to start offering yuan deposits, remittances and exchanges soon, and credit cards later. 'We're definitely interested in launching a number of renminbi products to meet customer demand,' said spokeswoman Lavina Chan. None of the banks specified the interest rate for deposits. Renminbi business also came a step closer to reality after the People's Bank of China announced last week that it chose Bank of China (Hong Kong) to be the sole settlement bank for personal yuan transactions. Most of the renminbi flowing into Hong Kong is from mainland visitors buying clothes, electronics and jewellery and other goods. In the first 10 months of the year, Hong Kong had 12 million visitors, of whom 6.5 million came from the mainland. Since the central government started easing restrictions on travel to Hong Kong over the past two years, it has 'encouraged a lot of mainland people to come here, so it will help because they can spend money more freely here,' said Hung Wan-sing, associate professor of economics at Hong Kong Baptist University. 'For our retailers, our banking system, it certainly means we see a lot of renminbi...it will create a lot of opportunities, so it will boost our economy a lot,' he said. It is difficult to guess how much more money will be spent, but according to Denise Yam Wing-yan, an economist at Morgan Stanley, spending by mainland visitors this year is expected to hit $50 billion, or about 4 per cent of Hong Kong's gross domestic product. It is estimated that about four-fifths of that amount will go on shopping, meals and entertainment. If they spend 20 per cent more, that would add $8 billion to the demand for Hong Kong's goods and services, she wrote in a report last month. Along with possibly boosting spending, some expect that the new measures will also mean that idle yuan notes held in Hong Kong could be deposited into interest-paying bank accounts. It is hard to say exactly how much renminbi is in circulation in Hong Kong but estimates have ranged from $30 billion to $100 billion. Nonetheless, it should be noted that overall renminbi-related business in Hong Kong is still small. Jun Ma, an economist at Deutsche Bank, said that yuan-denominated transactions were only about 1 per cent of the monetary base. Most analysts said the next step would be to allow Hong Kong banks to start offering renminbi loans. Local banks had an advantage in this area because they had better systems for monitoring loans, said Francis Lui Ting-ming, director for the Centre for Economic Development at Hong Kong University of Science and Technology. The mainland banking system has been hobbled by a massive amount of bad loans to state-owned enterprises and is under pressure to reform. As a result, borrowed money is much harder to come by. But Hong Kong banks follow international standards. 'Chinese banks may not pay as much attention,' Mr Lui said. 'Sometimes loans are decided by political factors. In the past they lent a lot of money to state-owned enterprises which were losing money. Sometimes bribery could affect lending.' Even if Hong Kong does become a city with two currencies, Mr Yu, of Yue Hwa, said it would not be a big deal for China. 'Not long ago there were two currencies in China - the renminbi and the FEC,' he said, referring to Foreign Exchange Certificates, which were used to buy highly sought after duty-free goods.