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Press Releases

Inclusion of Hong Kong dollar in the Continuous Linked Settlement System

The Hong Kong Monetary Authority (HKMA) announced today (Monday) that the Hong Kong dollar has been included in the Continuous Linked Settlement (CLS) System with effect from today.

The CLS System is a global clearing and settlement system for cross-border foreign exchange transactions operated by CLS Bank International (CLS Bank). The inclusion of the Hong Kong dollar into the CLS System enables foreign exchange transactions involving the Hong Kong dollar to be settled through the CLS System on a payment-versus-payment (PvP) basis, thus removing the settlement risk in these transactions. The finality of settlement for transactions made through the CLS is protected by the laws of Hong Kong, and the CLS is a clearing and settlement system designated under the Clearing and Settlement Systems Ordinance.

The Hong Kong dollar joins three other currencies (Korean won, New Zealand dollar and South African rand) to become the newly included eligible currencies of CLS Bank. Together with the existing 11 eligible currencies1, there are now 15 currencies eligible for settling through CLS Bank.

The participation of the Hong Kong dollar in the CLS System is a further endeavour of the HKMA to eliminate the Herstatt risk (settlement risk arising from the two legs of a foreign exchange transaction being settled in different time zones). The US Dollar Clearing System, launched in Hong Kong in 2000, and the Euro Clearing System, launched in 2003, have helped provide an effective mechanism for removing the Herstatt risk in foreign exchange transactions involving the US dollar, the euro and the Hong Kong dollar.

"The inclusion of the Hong Kong dollar in the CLS system is an important step in the ongoing efforts of the Hong Kong Monetary Authority in the elimination of settlement risks for foreign exchange transactions. We are pleased that banks in Hong Kong are now provided with an additional channel to settle foreign exchange transactions in a safe and efficient manner," said Mr Peter Pang, Deputy Chief Executive of the Hong Kong Monetary Authority.

More information about CLS can be obtained on its website (www.cls-group.com).

For further enquiries, please contact:

Jasmin Fung, Manager (Press), at 2878 8246 or
Kevin Ip, Manager (Press), at 2878 1687

Hong Kong Monetary Authority
6 December 2004

1 Australian dollar, Canadian dollar, euro, Japanese yen, Pound sterling, Swiss franc, United States dollar, Danish krone, Norwegian krone, Swedish krona and Singapore dollar.

Last revision date: 1 August 2011
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