HKMA’s Chan happy with pace of renminbi internationalisation

Speaking on the sidelines of the Think Asia, Think Hong Kong conference in London on Tuesday, Norman Chan, chief executive of the Hong Kong Monetary Authority said he was content with the pace of internationalisation of the renminbi.

"The People's bank of China are very clear about where they are heading," he said. "When you come to the pace, I think the guiding principles are basically being incremental and gradual so you don't take a great leap forward, but a step at a time".

The developments of the currency must be "subject to proper risk management control," said Chan. "You want to be incremental as this has never been done before, therefore when you ease certain rules or restrictions, you want to observe how the market responds to it, how will the offshore market evolve around this new set of rules and gather some experience before you make the next step".

He added that as the People's Bank had been "quite clear in terms of the guiding principles," he was "most happy", with the speed of the internationalisation tand he thought it was "the right approach".

After all, he said, this is the beginning of a "new era", not a "short term play. You are talking about the second largest economy in the world, providing 35% or more of the growth momentum in the next couple of years actually allowing its own currency to be used in trade, investment and even as a reserve currency, this is a big shift," he explained. "It will provide huge opportunities, not just for Hong Kong, but for everybody".

The fact that the relaxation of the rules regarding international use of the renminbi will not only benefit Hong Kong, did not phase Chan at all.

"These policies are not Hong-Kong specific, when the rules are relaxed and allow bridges to be built, they are not geography-specific. If they allow foreign direct investment using renminbi, that means foreign, from any jurisdiction going to China. [I am] not at all concerned by this," he said, seeming confident in Hong Kong's ability to be the pre-eminent international renminbi trade hub.

Talking of his trip to London he said that he was here to "explain to banks in London that there is a huge opportunity for everyone". He said the competition between the countries was not the only case in point, but that London's banks "must" provide offshore renminbi banking services as "the market is going to grow very, very fast."