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
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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
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Introduction of RMB Business
• Explosive growth in RMB offshore market
From: HKMA, Sept 2013
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Introduction of RMB Business
• Explosive growth in RMB offshore market
From: HKMA, Sept 2013
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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
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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
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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
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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
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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
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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
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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
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What We Have Learnt
Regulations take time
to evolve
System manipulations
Effective channels with
regulatory entities
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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
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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
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payments
Recent Trends in RMB Payments
• Focus started to shift
From: HKICL, Sept 2013
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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
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Contact Us
Ms. Christine Fan
• Public Institutions Business Head, Financial Institution Department
• Tel: +852 3510 8265
• Email: christine.fan@icbcasia.com
Mr. Tom Chen
• Deputy Head, Corporate Banking Product Development Department
• Tel: +852 3510 8300
• Email: tom.chen@icbcasia.com
Mr. Ken So
• Executive Director, Corporate Banking Product Development Department
• Tel: +852 3510 8903
• Email: ken.so@icbcasia.com
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