Governor Zhou Xiaochuan of the People's Bank of China (PBOC), China's central bank, and Chief Executive of the Hong Kong Monetary Authority (HKMA) Joseph Yam signed in Beijing Wednesday a cooperation memorandum for conducting renminbi (RMB) business in Hong Kong.

With the approval of the State Council, banks in Hong Kong will be able to conduct RMB business in four areas including deposit, renminbi yuan-HK dollar exchange, cash remittance and credit card services.

The PBOC has announced it will provide clearing arrangements for Hong Kong banks so as to facilitate economic and personnel exchanges between the mainland and Hong Kong and direct the orderly circumfluence of RMB in Hong Kong.

The PBOC and HKMA will choose a qualified Hong Kong listing bank as clearing bank for personal RMB service. Under this RMB business scheme, participating Hong Kong banks will, after setting aside appropriate amounts of funds for meeting withdrawals, place the RMB funds absorbed from their depositors with the clearing bank for providing RMB clearing services in Hong Kong.

Such a clearing arrangement provided by the PBOB is confined to transactions that facilitate personal spending and do not involve investment and other capital account transactions.

Chinese Vice Premier Huang Ju, present at the signing ceremony, met with Hong Kong Financial Secretary Henry Tang and a Hong Kongbank consortia delegation before the ceremony.

The opening of RMB services in Hong Kong is a big event in mainland-Hong Kong financial cooperation, Huang said, expressing hope that the financial departments in the two areas will carry out close cooperation to guarantee the smooth process of such service.

(Xinhua News Agency November 19, 2003)