Updated at 5.28pm: The government would have further discussions with mainland authorities about expanding Hong Kong's yuan business, Financial Secretary Henry Tang Ying-yen said on Wednesday. In his third budget speech, Mr Tang said Hong Kong made progress in the diversification of yuan assets and liabilities last year. 'As at the end of [last year], 38 banks in Hong Kong were providing yuan deposit-taking, exchange and remittance services,' he said. 'Total yuan deposits in Hong Kong had reached 22.6 billion yuan [HK$21.7 billion], and the cumulative value of spending and cash withdrawals using yuan debit and credit cards in Hong Kong amounted to $9.4 billion.' To further expand Hong Kong's yuan transactions, Mr Tang said the Clearing Bank for yuan business would shortly launch a new settlement system, which was being developed by Hong Kong Interbank Clearing. Mr Tang also said the government was in discussions with the central government on two other areas - proposals to allow cross-boundary trades to be settled in yuan and to establish a yuan debt issuance mechanism in Hong Kong. 'These two types of business, if introduced, will greatly promote trade between the two places and the development of our bond market,' Mr Tang said. 'They will at the same time provide a testing ground for the move towards full yuan convertibility.' In late 2003, the People's Bank of China, the mainland's central bank, announced the first phase of liberalisation for Hong Kong lenders to conduct four types of personal yuan business - deposit, remittance, exchange and credit cards. Further liberalisation of yuan business in Hong Kong has been announced in the past two years. This included the daily limit on yuan exchange being raised from 6,000 to 20,000 yuan for non-depositors. Daily remittances of 80,000 yuan were allowed, up from the previous 50,000 yuan. Customers in four more industries - transport, communications, medical services and education - could open yuan deposit accounts, joining those in the retail sales, catering and hospitality sectors. Hong Kong residents could issue yuan cheques of up to 80,000 yuan a day per account for personal consumption in Guangdong. Banks were allowed to set their own spending limits for holders of yuan-denominated credit cards, rather than being required to cap them at 100,000 yuan. In February 2004, the Bank of China (Hong Kong) was designated as the clearing bank for personal transactions involving yuan in Hong Kong. Since then, the bank has acted as a settlement agent for yuan banknotes and funds in the city and as an intermediary between banks in Hong Kong and the PBOC. Other changes Mr Tang announced on Wednesday would include a 20 per cent reduction in a levy imposed on trading in securities, futures and options contracts within this year. Mr Tang said the cut, along with the suspension of the investor compensation levy announced by the Securities and Futures Commission last December, would save about $300 million a year in market transaction costs.