June 14, 2022
HONG KONG – is seeking more measures to further enhance its status as an international financial hub, especially with the aid of financial technology development.
Eddie Yue Wai-man, chief executive of Hong Kong Monetary Authority, made the remarks to China Daily in a recent interview, emphasizing his confidence in the stability of the city’s financial system and the US dollar currency peg.
Eddie Yue Wai-man, chief executive of Hong Kong Monetary Authority, said that a key HKMA priority is launching in the second half of the year a pilot trade settlement system
Yue said that a key HKMA priority is launching in the second half of the year a pilot trade settlement system.
The HKMA has held discussions in recent years on the idea with the Bank of Thailand, the Central Bank of the United Arab Emirates, and the Digital Currency Institute of the People’s Bank of China on creating a program that would use central bank digital currencies (CBDCs) as tools to tackle the bottlenecks in cross-border payments.
The joint effort, named m-CBDC Bridge or mBridge, has the goal of facilitating real-time cross-border foreign exchange payment-versus-payment transactions in a multijurisdictional context and on a round-the-clock basis.
Trade settlement, one of about 15 applications of the mBridge program that was identified by the authority, is expected to reduce the cost and time for cross-border settlements, Yue said. He said some foreign domestic helpers could benefit from it when they transfer money to their family members in their respective homelands.
As use of the mBridge program grows, more central banks in different regions might be encouraged to participate so that easier cross-border payments among participating banks can be realized in the future, Yue added.
The HKMA chief also stressed that the city’s exchange-rate system has always been effective and stable during the past decades since it was launched in 1983.
His remarks come amid a new debate on whether the Hong Kong dollar should be pegged to another currency, such as the yuan, instead of the US dollar. A week ago, former HKMA chief executive Joseph Yam Chi-kwong and Financial Secretary Paul Chan Mo-po denied rumors that Hong Kong authorities are considering a change in the system.
“Despite so many challenges we have faced in past two or three years, such as social protests, Sino-US trade friction as well as the COVID-19 pandemic, we can see the system runs well,” Yue said. “I am confident the system is stable and resilient enough to resist those pressures.”
There is no need to change the peg, but authorities will continually review it to see if any aspect of it needs to be improved, Yue added.
He also said that the Hong Kong Special Administrative Region’s position as an international financial center has been enhanced and has become more stable over the past 25 years after returning to the motherland in 1997.
The city has been playing a more important role as a bridge between the Chinese mainland and abroad, he said.
While the city is expected to play more roles as the whole financial market has expanded and broadened with more participants, Yue said he has seen that the resilient financial system has a solid basis to realize the goal of enhancing its status as an international financial hub.