30.     Last year, Hong Kong became the first place outside the Mainland to conduct personal Renminbi (RMB) business, including deposit-taking, currency exchange, remittances and credit cards.  The development of this business has been encouraging.  At present, a total of 38 Hong Kong retail banks, nearly all of them, provide the first three of these services.  As at the end of January this year, total RMB deposits in Hong Kong exceeded RMB13.1 billion.  The cumulative value of transactions by Mainland visitors using RMB cards to spend and make cash withdrawals in Hong Kong exceeds $2.9 billion, or $3,000 per transaction on average.  Some Hong Kong banks also started issuing RMB cards in late April 2004 to facilitate cross-boundary spending by Hong Kong residents.

31.     While the range of RMB services now available in Hong Kong is quite limited, the provision of such services already represents a breakthrough.  For the further development of RMB business in Hong Kong, I have earlier indicated three strategic directions: first, exploring the diversification of the RMB assets and liabilities of Hong Kong banks; particularly on the liability side, diversification to non-residents and non-individuals of deposits now restricted to resident individuals; second, exploring the provision of appropriate RMB banking services for trade and other current account transactions between Hong Kong and the Mainland; third, exploring the feasibility of establishing a RMB debt issuance mechanism in Hong Kong.  These proposals, if implemented, will facilitate the channelling of RMB back to the Mainland and the diversification of RMB assets.  The further development of RMB business in Hong Kong needs to be compatible with the process of financial liberalisation in the Mainland.  The Government is exploring with the Mainland authorities ways to expand the scope of RMB business on a sound footing, in these three strategic directions.  In this context, we will also be studying the establishment of a clearing and settlement platform for RMB transactions so as to enhance their efficiency and safety.

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