Hong Kong RMB deposits seen surging on Qianhai reforms
HSBC expects renminbi deposits to triple as test bed for currency liberalisation gathers steam
Financial reforms in Shenzhen's Qianhai special economic zone could spur a surge in yuan deposits in Hong Kong, pushing them to 30 per cent of the city's deposit base from the current 10 per cent, HSBC Hong Kong chief executive Anita Fung said yesterday.
"I will not be surprised that when the renminbi becomes more internationalised, maybe 30 per cent of the deposit base in Hong Kong will be denominated in renminbi," Fung said at the Redefining Hong Kong Debate Series forum held by the South China Morning Post.
I will not be surprised that when the renminbi becomes more internationalised, maybe 30 per cent of the deposit base in Hong Kong will be denominated in renminbi
Yuan deposits in Hong Kong, the largest offshore yuan centre, reached nearly 700 billion yuan (HK$878 billion) at the end of May, accounting for more than 10 per cent of the city's deposit base, and are widely expected to exceed 1 trillion yuan by the end of this year.
"The speed [of growth in the use of yuan] can be fast," Fung said, mentioning the increasing popularity of the currency in cross-border trade as an example. In May, 16 per cent of the mainland's cross-border trade was settled in yuan, up from less than 1 per cent in 2009.
Fung hailed Qianhai, a 15-square-kilometre economic zone in western Shenzhen, as a milestone for the opportunities it presented to remove capital controls on the mainland, boosting the two-way flow of funds and making the mainland currency more convertible.
"This particular testing ground is not just going to be Qianhai," she said. "Think about the special economic zones we had when China opened up; the impact will spill over to all connected economic zones."