Yuan transactions may shift to unregulated channels if further restrictions are imposed on Hong Kong's yuan business, warned Joseph Yam Chi-kwong, the chief executive of the Hong Kong Monetary Authority.
The surge of yuan deposits in the first four months of the year has caused concern on the mainland about the inflow of so-called 'hot money'.
Yuan deposits in Hong Kong equalled 76.6 billion yuan at the end of April, more than twice the 33.4 billion yuan at the end of December, according to HKMA figures.
Mainland media reported that Hong Kong residents' currency deposits in Shenzhen rose to 39.8 billion yuan in April.
Individuals are allowed to buy up to 20,000 yuan a day using Hong Kong dollars. However, some observers think the system could be abused by international currency speculators taking positions on the yuan and this may also be of concern to mainland authorities.
But Mr Yam discounted the notion of speculation.
'Even if that were really feasible, international currency speculators are not interested in such small amounts or in the tedious arrangements,' he said.
