The mainland and Hong Kong have agreed to establish a cross-border payment arrangement for four currencies to enhance efficiency. From March 16, four mainland lenders would be able to use connected real-time gross settlement systems to make cross-border payments and settlements, the Hong Kong Monetary Authority said yesterday. Real-time settlement means payment transactions take place instantly. The arrangements will cover four currencies - the Hong Kong dollar, US dollar, euro and British pound. A memorandum has been signed between the People's Bank of China and the HKMA. 'These arrangements will deepen the ongoing promotion of financial co-operation between the mainland and Hong Kong and mark the introduction of a wide-ranging cross-border payment and settlement mechanism covering multiple currencies,' the authority said. 'The mainland and Hong Kong participating banks will benefit from enhanced liquidity efficiency and management as well as increased competitiveness in cross-border payment services.' The mainland's central bank said settlements in more currencies would be allowed based on market demand. China Construction Bank Corp, Bank of China, Industrial and Commercial Bank of China and Shanghai Pudong Development Bank will be the first lenders to conduct such settlements. They have appointed the Hong Kong branch of Construction Bank, Bank of China (Hong Kong), ICBC (Asia) and Citibank (Hong Kong) as their agent banks in the city. Castor Pang Wai-sun, a strategist at Sun Hung Kai Financial, said the arrangement could help strengthen Hong Kong's role as an important offshore market for foreign currencies. 'As Hong Kong and the mainland have used different systems for payment and settlement for a long time, [the new system] will serve as a pilot scheme for other more important currencies such as the yuan,' he said. Separately, HKMA chief executive Joseph Yam Chi-kwong said in his weekly column the regulator had ended a review of temporary liquidity measures adopted in September last year and would make an announcement by the end of the month. He also said the regulator hoped to replace the 100 per cent deposit guarantee introduced in October with a revised permanent scheme by the end of next year.