Norman T.L. Chan, Chief Executive, Hong Kong Monetary Authority
Total renminbi deposits and certificates of deposit grew to RMB810 billion at the end of March, a rise of RMB30 billion compared with the previous month. Renminbi trade settlement transactions handled by banks in Hong Kong in the first three months of 2013 reached a record high of RMB830 billion, an increase of 45% over the same period last year.
In view of the continuous and steady growth of the renminbi business in Hong Kong, we have decided to introduce new measures to deepen and enhance our renminbi clearing and business platform.
First is the launch of the offshore renminbi Hong Kong Interbank Offered Rate, or CNH HIBOR Fixing. Following detailed study and a one-year trial, the HKMA and the industry have considered the conditions now ripe for the launch of a formal offshore renminbi interest rate pricing mechanism in Hong Kong. It has been agreed that the Treasury Markets Association will launch the CNH HIBOR Fixing in June this year, covering tenors from overnight to 12 months. It will be the world's first offshore renminbi interbank interest rate fixing. The launch of the CNH HIBOR will promote the development of offshore renminbi loan market and interest rate-related financial products. It can also assist market participants in managing their interest rate risk. It will indeed become an important milestone in further enhancing the status of Hong Kong as an offshore RMB centre.
Second, in view of the continuous deepening of the offshore renminbi market in Hong Kong, the HKMA has decided to loosen two of its special regulatory requirements on renminbi business. One is that the renminbi net open position limit will be removed. The other is that the 25% minimum liquidity ratio for renminbi will also be lifted. A circular will be issued later to set out the details. With the removal of the above restrictions, the regulatory requirements for authorized institutions in respect of their management of foreign exchange and liquidity risks associated with renminbi business will be in line with those applicable to other currencies. This will allow more room and flexibility for banks in Hong Kong to further develop their offshore renminbi business.