Hong Kong could exert its advantages as an international financial center to promote the RMB into becoming a regional or even international currency, said Donald Tsang Yam-Kuen, chief executive of Hong Kong Special Administrative Region (SAR) Tuesday. Hong Kong has been playing the role as a “testing field” in the RMB’s internationalization, Tsang said when he delivered a speech at the Beijing-based Chinese Academy of Governance. The city has involved in the establishment of the system QFII and QDII, the circulation of the RMB overseas and the currency’s function expansion, the implementation of currency swap agreements, as well as the RMB cross-border settlement, according to Tsang.
On Sept. 28, 2009, China floated 6 billion yuan (about 878.5 million U.S. dollars) in T-bonds in Hong Kong, marking the first RMB-denominated T-bond issue outside the Chinese mainland. In April China’s State Council announced a pilot program allowing exporters and importers in Shanghai, Guangzhou, Shenzhen, Zhuhai, and Dongguan, to settle cross-border trade deals using RMB with Hong Kong, Macao, and the Association of Southeast Asian Nations. “The move not only made the RMB more attractive as a reserve currency, but also strengthened Hong Kong’s position as an international financial center,” Tsang said. “More importantly, Hong Kong could help the country to stave financial risk during the process,” he said.
|What are T-bonds?
T-bonds stand for treasury bonds, which literally mean bonds issued by the treasury of certain country. Generally speaking, they are marketable debt financing instrument of the government and tend to have long maturity.