Prof. Stephen CheungDean, School of Business

Hong Kong Baptist University

The role of Hong Kong in the rise of London and other RMB offshore centres

Contents

1. RMB International process2. Advantages of London as a RMB offshore

centre3. Hong Kong’s position as a RMB offshore

centre

RMB International

Bourse Consult (April 2012), London: a centre for renminbi business, City of London Renminbi Series, City of London Economic Developmentwww.cityoflondon.gov.hk/economicresearch

The advantages of London as a potential Centre for RMB business

• Time zone• UK legal and regulatory• The leading global financial centre (GFCI 11)

London’s current RMB business

According to a survey among 13 banks1. Deposit

Total value RMB 109 billion - customer deposit RMB35 billion- institutional deposit RMB74 billion

2.Retail banking- A small number of banks offer RMB services- Private banking RMB 3.6 billion

Corporate banking– Forex– Corporate accounts– Trade financing

Institutional and interbank market– A full range of RMB forex products– Spot RMB trading amounted at RMB 0.68 billion

per day, 26% of the global offshore RMB spot market

Hong Kong as a RMB offshore centre

• According to a report published by BoC (HK)• Deposit RMB 588.5 billion (87% ), CD RMB 72

billion (11.6 times ), balance of loans RMB 37 billion (16.2 times)

• RMB bonds issued RMB 107.9 billion (200 % )• RMB trade settlement in HK was up by 4.2

times to RMB 1.9 trillion

In terms of RMB denominated investment products

• Wealth management products have been launched

• RMB structured products• Deliverable RMB forwards• RMB – denominated insurance• RMB – denominated stocks• RMB – denominated gold EFT• RQFII schemes

Hong Kong is playing an important role in supporting RMB business

• 187 banks (22 % ) participated in HK RMB clearing platform

• 968 overseas banks had set correspondent bank account by the end of 2011, compared to 187 in 2010.

Synergy effects

• ‘West’ RMB offshore centre• Wholesale and retail• RMB offshore clearing and settlement• Financial innovation and derivatives products• Risk management

Thank you !