Enhancing Cross-Border Payments: A New Era for Hong Kong and Mainland China

Introduction

The introduction of multi-currency cross-border payment arrangements between Hong Kong and Mainland China marks a significant milestone in promoting economic and financial ties between the two regions. This innovative system aims to enhance the efficiency, safety, and convenience of cross-border payments, reducing settlement risks and costs.

Key Features of the New System

• Operational Model: A network of participating banks in both Hong Kong and Mainland China will be connected through a central clearing and settlement institution (CSI) in each market.
• Pricing Structure: Participating banks can enjoy a competitive, unified rate published by each Agent Bank when using the payment arrangements for fund transfers.

Early Successes and Future Prospects

• Usage: In the first two months of operation, the system handled 130 transactions worth approximately HK$50 million equivalent, with positive user feedback and expected growth in usage.
• Promotion: The People’s Bank of China (PBoC) and the Hong Kong Monetary Authority (HKMA) will jointly promote the new system to banks on the Mainland and in Hong Kong to capture potential business growth.
• Future Development: The HKMA will continue to discuss ways to improve financial infrastructure development with its Mainland counterparts, complementing efforts to strengthen Hong Kong’s multi-currency, multi-dimensional financial infrastructure.

Conclusion

The introduction of this new system is a significant step towards promoting economic and financial ties between Hong Kong and Mainland China. By enhancing the efficiency and safety of cross-border payments, this innovative arrangement has the potential to drive growth and development in both regions.