Hongkong Liberalise RMB Exchange Rate Restrictions Not Only For Shanghai And Hong Kong

The president of the Hongkong Monetary Authority announced the cancellation of the quota of twenty thousand yuan per person per day from next Monday (November 17th).

On the face of it, this measure is just to accommodate and cooperate with Shanghai and Hong Kong on the same day, but it is such a very specific measure of RMB management. Its impact and significance may be very far-reaching.

As soon as Hongkong and Hong Kong pass through, there will be a large number of residents entering the A share market, with a quota of 20 thousand yuan per person per day.

It is not enough for speculates to buy or sell cash.

According to the RMB settlement agreement signed in 2004, the Hong Kong people have been exchanging RMB with the clearing bank at the Shanghai exchange window.

The release of the Hong Kong people's exchange restrictions is actually the change of the renminbi's judgement site, from the onshore market to Shanghai's direct judgement in the offshore market, Hongkong.

In fact, this means that the liberalization of Hong Kong people's exchange of Renminbi restrictions is not only convenient for Hongkong and Hong Kong to facilitate Hong Kong people to fry A shares, but is further affirming the offshore RMB center of Hong Kong.

China has become the second largest economy in the world and the largest trading power. The major cities of the world's economic development are competing against the offshore RMB center.

Singapore, London, Paris, Frankfurt, Basel and Luxemburg all have the conditions of offshore RMB center.

Although Hongkong can be said to be the first offshore RMB center, and today it still occupies a dominant position, it currently accounts for 53% of the global offshore RMB market share.

But RMB cross-border business is a growing "big cake". If Hongkong can not take advantage of and expand its own advantages, it will shrink as the largest offshore RMB center.

The president of the Hongkong monetary authority also said that after the cancellation of the 20 thousand yuan ceiling, Hongkong's renminbi cash exchange and Renminbi financing, loans and other restrictions are no longer applicable, which will help Hongkong financial institutions to launch and sell RMB financial products.

Mainland residents are keen on all kinds of financial products. If Hongkong financial institutions issue RMB financial products, according to Hongkong's professional financial capabilities and mature financial products, then the purchase of Hongkong RMB financial products will not be just residents of Hongkong, I'm afraid the mainland will also have large quantities.

Money came.

This is undoubtedly also strengthening the status of Hongkong's offshore renminbi centre.

The offshore RMB capital pool has 1 trillion and 100 billion yuan. If we look at the abolition of the RMB exchange restrictions in a static way, we can say that there is probably no problem with the Hongkong market.

However, after the opening of Hongkong and Hong Kong financial institutions and the issuance of RMB financial products by financial institutions in Hongkong, the flow of funds and the volume and amount of circulation in the offshore RMB pool will be much larger than that at present.

This has also strengthened the status of Hongkong's offshore renminbi centre.

The liberalization of Hong Kong people's RMB exchange restrictions is not only conducive to Hongkong's economy, but also conducive to the strengthening of Hongkong's offshore RMB center, and also to the mainland, which is conducive to the internationalization of RMB.

The internationalization of RMB is mainly divided into two items. 18 years ago, the RMB had realized the convertibility of current account, and then the opening of capital account and the free convertibility of RMB were realized.

Over the past 18 years, RMB capital account convertibility is not without progress.

IMF has seven categories and 40 items for pactions under capital account.

Of the 40 items, 30 are currently achieved in China, accounting for 75% of all pactions.

Specifically, foreign companies are unable to issue stocks and bonds in China, and domestic residents can not directly invest in overseas securities (only by way of QDII).

It is not possible to directly invest in securities in the mainland (only by way of QFII and RQFII).

Hong Kong and Hong Kong have opened and cancelled the RMB exchange restrictions on Hong Kong people. At least, they broke through the two articles: "domestic residents can not directly invest in overseas securities," and "overseas residents can not directly invest in securities in the mainland".

So how much more is there to limit the convertibility of RMB capital account? The RMB has been infinitely close to internationalization, and the marketization of RMB exchange rate is just around the corner.