Payment Lesson from Other Countries – China & Hong Kong

Report
Payment Lesson from Other
Countries – China & Hong Kong
September 2013
Contents
Introduction of RMB Business
Challenges Encountered
Solutions
What We Have Learnt
Recent Trends in RMB Payments
2
Introduction of RMB Business
• The Scopes of RMB business can be
divided into TWO parts:
Cross-border Business (Since 2004)
Offshore RMB Business (Since 2010)
• Cross-border (Hong Kong & China)
• Without any RMB cross-border flows
Payments
between China and Hong Kong
• Certain restrictions for personal
• Treated like a foreign currency in
customers
Hong Kong
• Payments under Current & Capital
accounts for corporate customers
• Cross-border correspondent bank
services
3
Introduction of RMB Business
• Explosive growth in RMB offshore market
From: HKMA, Sept 2013
4
Introduction of RMB Business
• Explosive growth in RMB offshore market
From: HKMA, Sept 2013
5
Challenges Encountered
• Various restrictions exist
Cross-border Personal Payments
Aggregate daily limit – RMB80,000
Same name remittances allowed only
Cross-border Corporate Payments
Must be either current or capital accounts
Transaction background must be examined
Offshore Payments
Strict limitations on offshore payments at the launch of RMB
business
6
Challenges Encountered
• Local payment system in China involved
– China National Advanced Payment System
• A local payment system in China
• Different payment message type (CMT vs SWIFT
MT)
• System in Chinese
7
Challenges Encountered
• Local payment system in China involved
– All cross-border payments must be processed
by the RMB Clearing Bank at the beginning
CMT
A bank in China
Different formats and Chinese characters
may be included
A bank in Hong Kong
8
Solutions
• Regulatory relaxations
– Various measures announced by the People’s
Bank of China and the Hong Kong Monetary
Authority to further complete the RMB
business
9
Solutions
• Regulatory relaxations
• PBoC – Introduced cross-border trade business
2009
• PBoC – Allowed banks in China to provide RMB corresponding
bank services for foreign banks
• HKMA – Allowed FIs in Hong Kong to engage in RMB business in
2010
accordance with the banking practice in other currencies
• HKMA – Removed the restrictions on offshore RMB payments
• PBoC – Allowed banks in China to credit the payments to
2013
the beneficiary prior to verify the transaction background
10
Solutions
• System enhancements & developments
– The RMB Clearing Bank
• Complied a set of rules for straight processing on
RMB cross-border payments
• Chinese characters conversion
– Introduction of RMB RTGS in 2007
• The only offshore RTGS system denominated in
RMB
• A replica of HKD RTGS
• A wide range of clearing and settlement functions
11
Solutions
• Persistent communications with monetary
authorities
– Renminbi Services Committee in the Hong
Kong Association of Banks provides a forum
to discuss industry-wide issues arising out of
the provision of RMB banking services in
Hong Kong
– Communications between the Renminbi
Services Committee and the PBoC and
HKMA help improving the RMB payment
practice
12
What We Have Learnt
Regulations take time
to evolve
System manipulations
Effective channels with
regulatory entities
13
Recent Trends in RMB Payments
• Allow foreign banks to join the local
clearing network directly
– CIPS: China International Payment System
• PBoC announced the development of CIPS in 2011
• CIPS is most likely to operate in CHIPS way, but need to
fulfill the regulations set by PBOC or SAFE
• Allowing 50 to 100 Chinese and international major banks to
become members, to settle and clear RMB payments
through CIPS directly
• Other financial institutes in the world can establish
corresponding bank relationships with the CIPS members for
clearing and settlement RMB payments through CIPS
14
Recent Trends in RMB Payments
• Allow foreign banks to join the local
clearing network directly
– Payment systems in certain provinces allow
banks outside China to join directly
• Shenzhen Finance Settlement System (SZFSS)
– Allow banks in Hong Kong to join the SZFSS, to settle
Renminbi payments between Hong Kong and Shenzhen
directly
15
Recent Trends in RMB Payments
• Focus started to shift
Offshore
Cross-border
trade
Personal
Cross-border
settlement
payments
Payments
16
payments
Recent Trends in RMB Payments
• Focus started to shift
From: HKICL, Sept 2013
17
Recent Trends in RMB Payments
• Focus started to shift
– With the expanded RMB business scopes,
more and more products & services have
been developed and provided for customers
– The daily RMB clearing value reached to 250
billion in 2012
18
Contact Us
Ms. Christine Fan
• Public Institutions Business Head, Financial Institution Department
• Tel: +852 3510 8265
• Email: [email protected]
Mr. Tom Chen
• Deputy Head, Corporate Banking Product Development Department
• Tel: +852 3510 8300
• Email: [email protected]
Mr. Ken So
• Executive Director, Corporate Banking Product Development Department
• Tel: +852 3510 8903
• Email: [email protected]
19
- END -
20

similar documents