Renminbi Clearing: New Offshore RMB Centre in Frankfurt

Being the only offshore market that has RMB sovereign bonds issuance so far, Hong Kong is also an offshore RMB pricing centre, where a complete yield curve for sovereign bond has been formed. The CNH Hong Kong Interbank Offered Rate (“CNH HIBOR”) fixing price has become publicly available and it has been used as the benchmark rate for the issuance of RMB certificate of deposit and CNH/USD cross-currency swap transactions.

HKTDC: Do you expect any new developments or additional chances in the near future?

Mr. He: We have been seeing increasing use of RMB by geography and products. We expect to see further development going forward. The Shanghai-Hong Kong Stock Connect Scheme will be launched later this year. In this ground-breaking initiative, both Mainland and Hong Kong investors will, for the first time, have mutual market access to make their investments. This will not only facilitate an orderly flow of RMB funds between the two markets and expand the investment channels available for offshore RMB funds, but also lead to precipitation of RMB funds from overseas to Hong Kong and increase the foreign exchange transaction volume. In this way, Hong Kong’s position as the premier offshore RMB centre could be further strengthened.

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