London has gone its own way again, as the UK and Hong Kong have signed a pact to "promote cooperation on development of offshore renminbi business".
In an official statement by the Hong Kong Monetary Authority (HKMA):
The HKMA and the UK Treasury today [Monday] announced the launch of a joint private-sector forum, to be facilitated by the HKMA and the UK Treasury, to enhance cooperation between Hong Kong and London on the development of offshore renminbi (RMB) business.
This forum was set up following a discussion between the chief executive of the Hong Kong Special Administrative Region, Donald Tsang, and the UK Chancellor of the Exchequer George Osborne in September 2011 to foster cooperation on development of offshore RMB business.
The forum will focus on exploring synergies by enhancing linkages between Hong Kong and London, specifically regarding clearing and settlement systems, market liquidity and the development of new RMB-denominated financial products. It will comprise representatives from both Hong Kong and London of banks, including HSBC, Standard Chartered, Bank of China, Deutsche Bank and Barclays, and may invite representatives of other institutions as appropriate. The forum will meet twice a year, with the first meeting to be held in Hong Kong in May.
Tsang said: “With the support of the Central Government, Hong Kong has developed into a global hub for offshore RMB business. Banks and financial institutions in London are most welcome to make good use of Hong Kong’s offshore RMB platform. I am delighted that the private sector is taking this important step to foster cooperation between the two financial centres.”
The Financial Secretary John C Tsang said: “The launch of the forum is an encouraging step to enhance Hong Kong’s cooperation with London on the development of offshore RMB business. Enhancing linkages between the two financial centres will help strengthen the status of Hong Kong as the global hub for offshore RMB business.”
The chief executive of the HKMA Norman Chan said: “By establishing appropriate linkages with Hong Kong’s offshore RMB platform, banks in different parts of the world will be able to provide a comprehensive range of RMB banking and financial services to meet the rapidly increasing demand of their customers. Hong Kong and London are well placed to develop offshore RMB business, and closer cooperation between the two financial centres will bring about mutual benefits and a win-win situation.”
But will it make a difference?
London has long been seen as a financial hub for Europe. Historically, it has become a hub for the evolution of the financial markets, especially in a time of regulatory change.
As China looks to further liberalise its currency and attract more foreign investors, some observers have reinvigorated discussions of London becoming an offshore currency market for China, but analysts argue that London is nowhere near ready for this.
For the full story, click here for "London 'not ready' to be offshore market for China".
- Euromoney Skew Blog