Key Information

inSight
Speeches
Speeches by Speaker
Norman T.L. Chan
Peter Pang
Eddie Yue
Arthur Yuen
Raymond Li
Edmond Lau
Esmond Lee
Meena Datwani
Vincent W.S. Lee
James Lau
Joseph Yam
Y K Choi
William Ryback
David Carse
Tony Latter
Andrew Sheng
Hans Genberg
Simon Topping
Michael Taylor
The Honourable Donald Tsang
Chen Yuan
Dai Xianglong
Don Brash
Jaime Caruana
Andrew Crockett
Mario Draghi
David Eldon
Stanley Fischer
Timothy F. Geithner
Stephen Grenville
Kenneth G. Lay
William McDonough
Ernest Patrikis
Glenn Stevens
Jean-Claude Trichet
Tarisa Watanagase
Zeti Akhtar Aziz
Press Releases
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
Press Releases by Category
Bogus Voice Message Phone Calls
Banking in Hong Kong
Fraudulent Websites, E-mails and Telephone System, and other fraud cases
Granting of Banking Licences
Exchange Fund
Table of Multiples of Notes and Payments for Allotted Amount under non-competitive tender
Table of Multiples of Notes and Payments of Application Amount under non-competitive tender
Tender of Exchange Fund Bills and Notes
Tender Results of Exchange Fund Bills and Notes
Tentative Issuance Schedule for Exchange Fund Bills and Notes
Appointments and Departures
HKMA Pay Review
HKMA Publications
Speeches
The Hong Kong Mortgage Corporation
Hong Kong Note Printing Limited
Hong Kong Institute for Monetary Research
Exchange Fund Investment Limited
Others
Hong Kong Financial Infrastructure
International Relations
Investment Products Related to Lehman Brothers
Monetary Policy
Notes and Coins
Renminbi business
Credit Card Lending Survey
Monetary Statistics
Residential Mortgage Survey
Year 2000
Others
Guidelines and Circulars
Guidelines
Circulars
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
359.3404

Speeches

Opening remarks at Tenth anniversary celebration of Hong Kong Dollar settlement in CLS

by Peter Pang, Deputy Chief Executive, Hong Kong Monetary Authority

21 October 2014

David1, distinguished guests, ladies and gentlemen, 

I am honoured to be here today to celebrate the 10th anniversary of the Hong Kong dollar settlement in the CLS system. 

Opening 

2.  If we were a married couple, this event would mark our Tin Anniversary, with tin symbolizing durability and pliability.  It is good to note that our bonding remains robust, despite the fact that CLS has 16 other currency partners, and its desire to have more in the future. 

3.  According to Jane Austen, ‘happiness in marriage is entirely a matter of chance’.  Being a monetary authority, the HKMA would not leave such an important financial infrastructure for addressing the FX settlement risk to chance. 

4.  The one thing that keeps our bonding with CLS strong is our common vision – to provide the solution to help market players eliminate the FX settlement risks through a highly effective and efficient settlement platform. 

5.  Our decision to join the CLS in 2004 was based on the simple fact that CLS provides the most powerful global solution to eliminate the FX settlement risks among market players.  And CLS has delivered such a solution without a hitch in the past decade. 

Good times 

6.  Like all happy marriages, the bonding should foster growth and help the partners to realise their potential during good times; and provide an anchor to help them to face the challenges of the bad times with resilience and confidence.  

7.  Both partners have certainly done well during the good times in the past decade. 

(i)                HK’s developments 

8.  During this period, Hong Kong has continued to consolidate its role as a premier international financial centre and has become a more globalised economy: 

-  The total assets of the banking system have increased 2.7 times to HK$18 trillion, with foreign currency assets accounting for about 60% of the pool. 

-  The market capitalization of the Hong Kong Stock Exchange has become more than 4 times bigger, advancing from number 8 to number 6 in the global ladder. 

-  The bond market has also increased by about 3 times, with foreign currency denominated bonds accounting for about 40% for most of the time. 

9.  Hong Kong has also become a hub for private wealth and asset management.  Nearly 80 of the top 100 global money managers are in Hong Kong.  The total assets under management hit a record high of US$2.1 trillion in 2013, with 72% of the funds sourced from non-Hong Kong investors.  Hong Kong’s net International Investment Position has also grown from 250% of our GDP in 2004 to close to 300% in recent years.  

10.  2004 also marked the commencement of offshore RMB business in Hong Kong and we are now the global hub of offshore RMB business. 

11.  Against this encouraging backdrop, the average daily FX turnover in Hong Kong has more than doubled, from US$102 billion in April 2004 to US$275 billion in April 2013. In fact, Hong Kong has become the 5th largest FX trading centre in 2013, up from the 6th place in 2004.  In short, Hong Kong has further consolidated its status as an international investment, banking, payment and commercial centre. 

12.  Effective FX settlement is a prerequisite to all these achievements, given the significant fund flows that an IFC, such as Hong Kong, needs to handle, and the need to maintain the stability of the Hong Kong dollar under the currency board arrangement.  

(ii)             CLS developments 

13.  As for CLS, as many of you know, it has gone from strength to strength in the past decade.  For instance, the number of currencies it supports has grown from seven from the start, to 17 today.  The number of settlement members has also increased from 39 to 62.  

14.  Moreover, the volume and value of transactions via the CLS have expanded significantly, with an average daily value of US$5 trillion2 and daily volume of one million transactions.  This should not be surprising as the global FX market has become much bigger, with the average daily turnover in 2013 (USD 5.3 trillion3) three times bigger than in 2004. 

Challenging times 

15.  As close partners, we have also faced significant challenges during difficult times in the past decade. 

16.  We all remembered vividly how a large part of the financial markets had almost come to a standstill after the collapse of Lehman Brothers in September 2008.  Yet, the foreign exchange market continued to operate smoothly.  Many market players had attributed the market stability to the support provided by CLS.  

17.  I also believe that our linkage with CLS has also provided the functional resilience and, importantly, confidence, that our market players needed in those critical moments. 

18.  This is certainly the case post Lehman’s collapse, as Hong Kong’s companies and individuals liquidated overseas assets and repatriated HK$220 billion back into Hong Kong to tide themselves over the liquidity and credit squeeze.  

Looking forward 

19.  It is no exaggeration to say that CLS is now one of the most important pieces of infrastructure supporting the global financial market.  The creation of the CLS Bank is also a shining example that demonstrates the power of private sector-public sector collaboration.  The HKMA is proud to be part of that success story.  

20.  So, what’s next?  I expect markets to keep changing, and they will only change faster in the coming years.  

21.  As technology advances, and Asia providing the engine for global growth in the medium term, I see plenty of opportunities for CLS to put its strategic focus in the region.  The HKMA welcomes the CLS’ efforts to put more new currencies and members into its orbit.  

22.  I look forward to seeing this happen sooner rather than later, and welcome opportunities for cooperation and knowledge sharing between us.  This is all because of what I said earlier – that we shared a common vision, and a more widely participated system should mean even less settlement risks for market players.  

23.  I look forward to celebrating our silver anniversary in 2029.  

Thank you.


1Mr David Puth, CEO of CLS Group Holdings, and CLS Bank International

2CLS reports both sides of an FX transaction. To adjust the average daily value data to equate to the same reporting convention used by the Bank for International Settlements, the gross values should be divided by two.

3BIS Triennial Central Bank Survey, FX turnover in April 2013

Last revision date: 21 October 2014
ABOUT THE HKMA
The HKMA
Tender Invitations
Careers@HKMA
Legislative Council Issues
Links
The HKMA Information Centre
KEY FUNCTIONS
Monetary Stability
Banking Stability
International Financial Centre
Exchange Fund
PUBLICATIONS & RESEARCH
Annual Report
Half-Yearly Monetary & Financial Stability Report
Quarterly Bulletin
HKMA Background Briefs
Reference Materials
Research
MARKET DATA & STATISTICS
CMU Bond Price Bulletin
Economic & Financial Data for Hong Kong
Monthly Statistical Bulletin
Monetary Statistics
KEY INFORMATION
Press Releases
Speeches
Guidelines & Circulars
Forthcoming Events
inSight
OTHER INFORMATION
Account Opening
Consumer Corner
Consumer Education Programme
Complaints about Banks
Complaints about SVF Licensees
Internet Banking
Fraudulent Bank Websites, Phishing E-mails and Similar Scams
Be Careful of Bogus Phone Calls and SMS Messages
Authenticate the Callers and Bank Hotline Numbers
Register of AIs & LROs
Register of Securities Staff of AIs
Register of SVF Licensees
Investment Products Related to Lehman Brothers
Photo Gallery