Dai Xianglong, former governor of the People's Bank of China, spoke at the opening speech of the 2022 Phoenix Bay Area Financial Forum on September 21, talking about the impact of RMB internationalization on Hong Kong's status as an international financial center.
He said that in order to steadily advance the internationalization of the renminbi, the offshore market of the renminbi must be developed.
The main purpose is to further improve the liquidity of offshore RMB, increase the variety of offshore RMB business, and strengthen the infrastructure construction of offshore RMB business.
He predicted that by 2035, the renminbi will become the third largest international currency after the US dollar and the euro, and the rapid development of Hong Kong's offshore renminbi business will bring another huge impetus to Hong Kong's promotion of its status as an international financial center.
Dai Xianglong said that after mainland funds enter Hong Kong, they will operate in accordance with Hong Kong's internationalization and marketization rules, and may be converted into foreign currencies, or enter the offshore RMB market to become part of the international financial market, and the funds will have "international capital attributes". Hong Kong's financial markets should not be "inlandised".
The accelerated pace of RMB internationalization has brought new historical opportunities for the consolidation and improvement of Hong Kong's status as an international financial center.
He mentioned that Hong Kong has long been ranked third in the international financial center.
He emphasized that Hong Kong is still a traditional base for exchanges and cooperation between Chinese and foreign financial institutions. It is believed that overseas financial institutions that have developed in Hong Kong for a long time will continue to stay in Hong Kong and cherish the cause of Hong Kong. It is expected that there will be more new foreign investment institutions and investors in the future. Enter the Hong Kong market.
He pointed out that the continuous expansion of connectivity between Hong Kong and Shanghai and Shenzhen will surely promote the continuous increase in the volume of financial products and financial transactions in Hong Kong's international financial center.
With the improved arrangements for Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect and Bond Connect, Connectivity has become the main channel for cross-border asset allocation by Chinese and foreign investment institutions.
Dai Xianglong predicted that by 2035, the RMB will become the third largest international currency after the US dollar and the euro. The rapid development of Hong Kong's offshore RMB business has brought a new huge impetus to Hong Kong's promotion of its status as an international financial center.
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Dai Xianglong said that it is necessary to consolidate and enhance Hong Kong's status as an international financial center in the construction of the Guangdong-Hong Kong-Macao Greater Bay Area.
He said, "Consolidating and enhancing Hong Kong's status as an international financial center is of great significance to the economic and social development of the Guangdong-Hong Kong-Macao Greater Bay Area, the whole of China, Asia, and even the world. At the same time, the economic growth strength of Mainland China and the Bay Area is also continuously supporting Hong Kong. Consolidation and improvement of its status as an international financial center.”
"Taking Stock Connect and Bond Connect as examples, at present, more than two-thirds of the A shares held by international investors are invested through Stock Connect, and half of mainland onshore bond transactions are conducted through Bond Connect. Shanghai and Shenzhen stocks and bonds The transaction scale is huge. With the expansion of the interconnection between Hong Kong and Shanghai and Shenzhen, it will bring huge financial transaction volume to Hong Kong and continue to expand the transaction scale of Hong Kong as an international financial center. This advantage of Hong Kong is not available in other international financial centers except New York. Yes." Dai Xianglong said.
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