3.Recently, Renminbi (RMB) has been increasingly accepted for retail transactions in Hong Kong, reflecting the need to meet the rising number of Mainland visitors and, in particular, the fact of a deeper integration with the Mainland. In recent months, banks are allowed to participate in the offering of RMB business to individuals in the form of deposit taking, exchange, remittance and credit card service etc.
i) Account for the different stages and the scopes in each stage of liberalization of Renminbi Business in Hong Kong.
ii) Apart from the above businesses, what further business(es) would you recommend to the Central Government in liberalizing Renminbi business in Hong Kong?
iii) Critically examine the possibility and the benefits of Hong Kong as the Renminbi Offshore Centre/Market.
Stages and the scopes in each stage of liberalization of Renminbi Business in Hong Kong
Outside mainland China, circulation of the Renminbi was not allowed and tourists were required to convent all Renminbi onto foreign currencies when traveling abroad. They also only required to the moneychangers (not bank) to convert into Renminbi because there was no lawful way to channel Reminbi to the Mainland through the banking system. However, the exchange rate of the exchangers deviated from the official Mainland rates, they were generally subject to less stringent supervision than banks.
Towards the end of 2001, the People’s Bank of China (PBoC) and the Hong Kong Monetary Authority (HKMA) started discussions to establish a legitimate channel that allowed Renminbi cash circulating in Hong Kong to flow back to the Mainland. On 18 November 2003, the People’s Bank of China announced a agreement to provide clearing arrangements for banks in Hong Kong that engaged in four types of personal Renminbi business : deposit-taking, exchange, remittance, and bank cards.
The first phase of liberalization of...