Banker urges greater currency role for BOC

THE Bank of China should take over from Hongkong Bank as the major banknote-issuing body in the Hongkong Special Administrative Region in the long term, according to a manager of the Xiamen International Bank.

Mr Zhuang Weiming also called on BOC to increase its financial strength to fight for a bigger role in the territory's banking market.

The bank executive put the suggestion at a symposium organised by the All-China Association of Hongkong and Macau Economic Studies in Beijing on Sunday.

Mr Zhuang, a committee member of the body, maintained that measures should be taken to give full play to the ''leading status'' of BOC in Hongkong.

One of these measures, he said, was the gradual increase of the portion of banknotes to be issued by BOC in order to boost its reputation.

He maintained that the recent decision of the Executive Council to allow the bank to issue no more than 10 per cent of the total supply of currency was ''too little''.

Following the accumulation of experience, Mr Zhuang said the portion should be gradually increased.

''In the long-run, the BOC should become the major banknote-issuing bank. This is fully in conformity with the spirit of the resumption of sovereignty of China over Hongkong.'' Mr Zhuang said BOC should try to expand its strengths through measures such as forming a conglomerate with other mainland banks in Hongkong, and also should consider allowing local Chinese banks and even foreign banks to join the BOC group.

It should also introduce new saving schemes in the territory to increase its market shares, he said.

''[BOC] should strive to seek a breakthrough [in its business] in the next three to five years,'' Mr Zhuang said.

Under the policy of ''developing a few more Hongkongs'' on the mainland, Mr Zhuang said it was an urgent task to solve the problem of how to converge the monetary systems between the territory and the mainland.

This was because of the imminent emergence of a ''regional monetary belt'' among Hongkong, Guangdong and Macau following their economic integration, he said.

Mr Zhuang added that the monetary system on the mainland should converge with that of Hongkong, but not the contrary.

In the long run, he said the three places should become a ''regional monetary belt'', adding that this would further buttress the status of Hongkong as a regional monetary centre.