STAMP DUTY (AMENDMENT) BILL 2022
President, I speak in support of the Bill because it is conducive to facilitating trading of RMB stocks in Hong Kong. In fact, Hong Kong will have a prosperous future in its development as a global offshore RMB hub.
Following the Russia-Ukraine conflict early last year, European countries and the United States (“US”) implemented financial sanctions by weaponizing international payment instruments such as US dollar, thus threatening the stability of the international monetary system. The US Federal Reserve’s interest rate hikes and significant balance sheet reductions have caused emerging market countries, which heavily rely on US dollar for payments, to raise their alertness and accelerate their consideration of commencing settlement in their own currencies with their major trading partners. The launch of the Regional Comprehensive Economic Partnership (“RCEP”) will continue to foster economic and trade cooperation between China and other member countries, thus creating a broader scope for the international use of RMB.
On the policy front, China has incorporated internationalization of RMB into its national development strategy and is determined to promote the international use of RMB. It is believed that the upcoming policy measures will dovetail with this strategy. I hope that the Financial Services and the Treasury Bureau will pay attention to the development direction of the policy measures in four major areas. Firstly, cross-boundary capital flows should be promoted and Hong Kong’s capability of managing offshore RMB liquidity should be enhanced. For example, we should explore the possibility of banks in the Greater Bay Area starting cross-boundary RMB interbank lending and account financing in accordance with the relevant regulations, lower the threshold of cross-boundary RMB liquidity pools and promote the integration of domestic and foreign currency liquidity pools, and appropriately increase the amount of cross-boundary RMB liquidity pool transfers. It is believed that the People’s Bank of China will continue to issue RMB bills and the Ministry of Finance will increase the issuance of RMB sovereign bonds by expanding the size and regularizing it, which will facilitate the development of repo of RMB bonds and better liquidity management in the market.
The second area is to develop RMB-denominated products to enhance the attractiveness of offshore RMB assets in Hong Kong. It is expected that the Mainland will continue to support Hong Kong financial institutions in RMB business innovation, develop offshore financing products, risk hedging products and foreign exchange trading products, study and promote RMB-denominated stocks and wealth management products, approve the issuance of dim sum bonds by domestic institutions, encourage the development of RMB settlement for bulk commodities, and build a platform for RMB investment, financing and risk management for Belt and Road countries and RCEP members, so as to meet the demands for RMB of different clients.
The third area is to promote special RMB business and expand the depth and breadth of Hong Kong’s offshore RMB market. In supporting Hong Kong’s development as a green financial centre, it is expected that cross-boundary use of RMB can be integrated into the development; and local governments, financial institutions and enterprises are encouraged to issue green bonds with RMB components and explore the cross-boundary use of e-CNY by leveraging Hong Kong’s mature financial system.
The last area is to improve mutual access of the financial markets and facilitate the cross-boundary flow of RMB in the Greater Bay Area. I hope that the Bureau will continue to discuss with the Mainland regulators to improve the mechanisms of Stock Connect, Bond Connect and Wealth Management Connect. We should lower the entry threshold for Mainland residents to participate in Stock Connect and Wealth Management Connect, include RMB-denominated stocks for Southbound Trading under Stock Connect, and introduce more investment products and insurance products that meet investors’ risk and return expectations in Wealth Management Connect; increase the number of Mainland institutional investors participating in Southbound Trading under Bond Connect, and offer more types of bonds for investment; and establish insurance after-sales service centres in the Greater Bay Area, say in Qianhai, Nansha and Hengqin, and implement in parallel cross-boundary RMB settlement of renewals and claims on a trial basis, which will further promote mutual market access of the insurance industry.
In general, the development of Hong Kong’s global offshore RMB business has entered a critical strategic period. President XI Jinping has encouraged Hong Kong to make good use of its distinctive advantages, seize historic opportunities offered by China’s development and actively dovetail itself with the 14th Five-Year Plan and other national strategies such as the development of the Greater Bay Area and high-quality Belt and Road cooperation and he hopes that Hong Kong will continue to create strong impetus for growth. I hope that the SAR Government will seize the opportunities arising from the development of various kinds of RMB business and introduce more new initiatives or legislation in addition to the Bill presented today to promote the development of RMB business in Hong Kong.
President, I so submit.