Announcement from central bank puts an end to months of anticipation
The State Council gave the go-ahead yesterday for mainland financial institutions to issue yuan-denominated bonds in Hong Kong, a long-awaited move set to further bolster the city's role as a platform for yuan business.
The announcement by the People's Bank of China ended months of anticipation. It also came days before Chief Executive Donald Tsang Yam-kuen is set to announce his policy agenda for economic development under the national 11th five-year plan on Monday.
Widely floated by officials in recent years, the decision will further widen the scope of yuan business in Hong Kong by allowing mainland institutions to raise yuan and facilitate the return of yuan circulating in Hong Kong to the mainland. It also follows the introduction of yuan deposits in early 2004. These deposits in Hong Kong stood at 22.8 billion yuan at the end of November.
Welcoming the move, Financial Secretary Henry Tang Ying-yen said although yuan bonds' trading would be limited initially, it was an important move to expand yuan business in Hong Kong.
'The new category of renminbi business is conducive to business opportunities for banks, and enhancing financial flows between Hong Kong and the mainland,' he said. The move also reaffirmed Beijing's support for Hong Kong's position as an international financial centre.
A Hong Kong Monetary Authority spokesman said the move would 'further promote economic integration between Hong Kong and the mainland and enhance the channels for returning renminbi circulating in Hong Kong back to the mainland'.