The Renminbi Is Hot In Hongkong &Nbsp; Experts Say The Hong Kong Dollar Will Be Replaced By RMB.

"I also want to get RMB wages."

At the press conference of the 25 yuan RMB outlook report, Liao Qun, senior vice president of CITIC Bank, predicted that RMB would be internationalized in 5 to 10 years. He used this phrase to express his urgent mood and cause the presence of people to laugh heartier.

RMB wage in Hongkong

At present, the renminbi has become the "Darling" of Hongkong residents. It is called "human child" by Hongkong.

According to the regulations, Hongkong residents can exchange RMB 20 thousand yuan per day.

Mr. Feng, a senior executive of a Hong Kong Bank, told reporters that he regularly convertibility of Hong Kong dollars or other foreign currency deposits into Renminbi.

"As long as you think about it, then turn around."

This became a kind of Hongkong.

Not only ordinary residents, many businesses in Hongkong also welcome customers to pay in Renminbi.

RMB bonds issued in Hong Kong have also been touted by the market.

With the rapid rise of Renminbi deposits in Hongkong, many people worry that the Hong Kong dollar may one day be replaced by the renminbi.

The position of Hong Kong dollar is at stake?

"Welcome to use Renminbi".

Matsui, a Japanese expatriate from Shenzhen, put his family in Hongkong for various reasons, but his salary was paid in Renminbi.

"During the financial tsunami, the company made plans to send HK dollars to such employees on the basis of convenience, but we firmly oppose it.

The renminbi has been rising, and the opposite is true.

He said.

The RMB against the Hong Kong dollar has changed from 1: 1 at the end of November 2006 to 1: 0.83 today (May 26th).

In the past, Hongkong people who used to use Hong Kong dollars in Shenzhen naturally complained that the Hong Kong dollar was getting worse and worse. Businessmen in Luohu were also reluctant to accept Hong Kong dollars.

The use of the renminbi in Hongkong is becoming more and more widespread.

At the end of last year, the automatic beverage vending machine, which accepted RMB bills, appeared quietly on the Star Ferry Pier in Tsim Sha Tsui, Hongkong.

Smart businessmen also adjusted the Hong Kong dollar to RMB 1 from 1 to 1: 1.1.

The slogan "welcome to use Renminbi" also appears in more and more restaurants.

The change in the status of the renminbi in Hong Kong is also closely related to the central bank's revision of the RMB clearing agreement with the Hongkong monetary authority in July last year.

The revision of the liquidation agreement means that the renminbi can be freely circulated in Hongkong as long as it does not involve reflux.

The Hongkong monetary authority data show that RMB deposits in Hongkong have increased from 70 billion 800 million yuan at the end of March last year to 451 billion 400 million yuan at the end of March this year, which has risen more than 5 times in one year.

With the increase of Renminbi deposits, offshore renminbi bond market also witnessed an unusually hot situation.

The Hongkong monetary authority data show that as of April this year, 49 "dim sum bonds" (Hongkong's offshore RMB bonds nicknames) were issued in Hong Kong, raising a total of 92 billion yuan.

The "dim sum debt" issued in the first 4 months of this year raised RMB 18 billion 500 million yuan, more than half of the total amount of RMB bonds issued last year by 35 billion 800 million yuan.

Whether it is the Ministry of finance, Asia open bank, McDonald's, Caterpillar, or China heavy duty truck and ocean going real estate, the "dim sum debt" issued by them is facing market loot, which often creates a new low yield of bonds.

All this is a clear proof of the rapid development of offshore RMB market.

Will HK dollars be replaced by RMB?

However, some experts point out that the love of RMB by ordinary citizens and investors may bring the risk of RMB replacing the Hong Kong dollar.

Song Min, director of the China Financial Research Center of University of Hong Kong, told our reporter yesterday that if the Hong Kong dollar stock is accumulating at present or faster, the renminbi will continue to become a strong currency, while the Hong Kong dollar linked to the US dollar will face the risk of "currency substitution" replaced by the renminbi.

He said that the so-called "currency substitution" effect in monetary economics means that the public is increasingly inclined to abandon local currencies and trade and invest in other currencies.

For example, in Latin America, the US dollar is widely used.

In Macao, the massive use of Hong Kong dollar is also a phenomenon of currency substitution.

"Currency substitution is also developing in Hongkong, where small pactions can be used in many places."

Song Min said, at present, the renminbi is still in the form of foreign currency, the amount is still not large, but "the risk of currency substitution may slowly emerge."

Song Min believes that once RMB deposits in Hongkong exceed 2 trillion or 3 trillion yuan, RMB deposits account for half of Hongkong's total deposits. Most assets can be traded in Renminbi, such as stock, real estate and daily consumption. Currency substitution has become a reality.

He predicted that RMB deposits in Hongkong could reach 3 trillion yuan in 5 years.

According to the data of the Hongkong monetary authority, as at the end of March this year, RMB deposits in Hong Kong amounted to 451 billion 400 million yuan (about HK $541 billion 200 million), accounting for 7.6% of total deposits in Hongkong, accounting for HK $7 trillion and 73 billion, accounting for 15% of all foreign currency deposits in Hongkong.

Liao Qun predicts that RMB deposits in Hongkong will reach 1 trillion yuan this year.

In May 23rd, members of the Hongkong legislature expressed concern about the risk of currency substitution. For this reason, Chen Delin, President of the Hongkong monetary authority, explained that 2/3 of the existing deposits of more than 450 billion yuan were enterprise deposits, which came from trade and business dealings with mainland enterprises. The enterprises holding Renminbi deposits in Hong Kong included the European and American and Hongkong local enterprises.

He believes that "the issue of substitution is exaggerated", and that Hongkong people's confidence in the Hong Kong dollar has not weakened. The increase in Renminbi deposits is only increasing in proportion to foreign currencies.

Can we keep a close watch on the US dollar?

However, Song Min believes that the emergence of currency substitution risk is only one manifestation of the future of Hong Kong dollar.

In fact, with the development of the inflation and the development of RMB offshore market, whether Hongkong should abandon the linked exchange rate system linked to the US dollar was once a hot topic in last year's market.

At the end of last year, discussions on the link between Hong Kong dollars and the renminbi were heating up again. Hongkong financial officials met with members repeatedly in the Legislative Council.

However, the officials of the HKSAR government, from the chief executive Donald Tsang to the former and current president of the HKMA, as well as the "Financial Secretary" and the Secretary for financial services and the Secretary for the Treasury, are all firmly in the same position: Hongkong needs to maintain a stable monetary policy, the renminbi is not convertible currency, and Hong Kong dollar should be linked to the US dollar.

Qilian live (John Greenwood), the chief economist for the "father of the exchange rate", also came to Hong Kong in October last year, and revisited the exchange rate system in Hong Kong's lecture.

Qilian said that there was no progress in negotiations between China and Britain, and that Hongkong's future was uncertain.

In 1983, he suggested that the Hong Kong dollar be linked to the US dollar. When Hongkong announced the linked exchange rate system in October 15, 1983, it pegged the Hong Kong dollar to the US dollar and set the exchange rate to HK $7.8 to US $1.

Since then, the financial market in Hongkong has gradually stabilized and the linked exchange rate system has been used so far.

Qilian has the same views as the SAR Government on the proposal to link Hong Kong dollars to the renminbi.

He believes that this needs to meet four conditions, including RMB convertibility, RMB becoming an international reserve currency, China replacing the US as the engine of global economic growth, and the PBC's interest as the most important monetary policy tool.

These conditions will take at least a few decades to achieve.

Song Min believes that the linkage between Hong Kong dollar and Renminbi is only one of the options for the future of Hong Kong dollar.

He believes that if we fail to discuss the future of the Hong Kong dollar in a timely manner and wait for the internationalization of the renminbi, it is inevitable that the Hong Kong dollar will be replaced by a strong currency as a vulnerable currency.

He believes that if we want to maintain the international status of the Hong Kong dollar, which is still widely used among the people of Hongkong, there are plans for discussion, including the link between Hong Kong dollar and a basket of currencies or the SDR.

The future of Hong Kong dollar is inevitable.