Further action has been agreed to support the continued development of the London - Hong Kong offshore renminbi (RMB) market at the third London - Hong Kong RMB Forum.
Attended by Financial Secretary to the Treasury, Greg Clark, and acting Chief Executive of the Hong Kong Monetary Authority (HKMA), Mr Eddie Yue, the Forum reviewed developments in the offshore market of the Chinese currency renminbi over the course of the last year.
In the morning, representatives from the London and Hong Kong offices of leading banks in the global RMB market agreed to continue raising corporate awareness of RMB and make it more user-friendly and accessible, as well as developing market facilities that enhance liquidity within the offshore market.
Representatives also agreed to promote and expand channels of RMB flows between mainland China and the offshore market.
Building on the success of the special session on corporate use of RMB at the previous Forum in London, financial institutions, investors and corporate attendees spent the afternoon discussing the latest trends in the expanding RMB market, focusing specifically on trade settlement, banking solutions and opportunities in RMB investments.
Greg Clark, who gave the keynote speech, welcomed the continued cooperation between the Hong Kong and the United Kingdom in developing the offshore RMB market and the recent developments in the London market. He said:
The UK government’s collaboration with the Hong Kong authorities on the development of the offshore RMB market is a major demonstration of the unique relationship between our two great financial centres.
With trading in RMB in London increasing three-fold over 2012, and a significant increase in the range of available products and services, there is a clear momentum behind London’s development as the western hub for RMB. And Hong Kong has cemented its position as the main gateway between the onshore and offshore RMB markets, with RMB 400 billion settled in Hong Kong daily.
Today’s Forum was a further important step in the development of the offshore RMB market, as participants agreed to step up their ongoing efforts, which will focus on enhancing the offshore RMB market and responding imaginatively to new channels for cross-border flows with Mainland China.
The Forum first met in Hong Kong in May 2012, and then in London in December 2012, where Banks agreed to a programme of work to support the development of the offshore market.
Since the December meeting, the Bank of England and People’s Bank of China have signed an RMB-sterling swap line. This is an agreement between the People’s Bank of China and the Bank of England that up to RMB 200 billion could be made available to the Bank of England to support the London RMB market in the UK in the event of a liquidity shortage causing a risk to financial stability.
In July, it was announced that the RMB Qualified Foreign Institutional Investor (RQFII) pilot would be extended to London also. This is a pilot scheme which allows offshore financial institutions to apply for a license to invest offshore RMB into onshore Chinese investments.