With all eyes on how the coronavirus pandemic will change the global financial landscape, Hong Kong is at a historic moment in forging ahead with the internationalization of the Chinese yuan, financial experts say.
Riding high on the goals and undertakings to reinforce the renminbi’s status in international trade and investment, the SAR should strive to cement its role as the world’s largest offshore renminbi center, reckon experts from the Financial Services Development Council — the government advisory body tasked with promoting further development of the city’s financial services industry.
As the coronavirus shows signs of being brought under control in China and the country takes the lead in restarting its economy, the yuan, to some extent, has become a safe haven asset the world over
Ba Shusong,
a member of the FSDC Mainland Opportunities Committee
“As the coronavirus shows signs of being brought under control in China and the country takes the lead in restarting its economy, the yuan, to some extent, has become a safe haven asset the world over,” Ba Shusong, a member of the FSDC Mainland Opportunities Committee, told an online media briefing on Tuesday.
“Global investors today have been voicing growing demand for the yuan. The coronavirus pandemic also makes the international community take a sober, hard look at the defects of the current international monetary system that has solely relied on a single currency, the US dollar,” said Ba, who is also chief China economist with Hong Kong Exchanges and Clearing.
“This leaves us at a historic moment for the internationalization of the yuan, a much-awaited moment since the 2008 global financial crisis,” he added.
“Today, the US economy accounts for 20 percent of the worldwide economic output, while the Chinese economy contributes 16 percent. However, China’s economic significance hasn’t been fully reflected in its currency,” said Ding Chen, a member of the FSDC board of directors. “Hong Kong has what it takes to fill such a gap.”
Ba believed the bond market should be at the forefront of the yuan internationalization. However, it remains a weak point for Asia’s financial center. Currently, major efforts to internationalize the currency are seen in the stock market, via the two cross-border stock trading programs.
According to the FSDC, total outstanding offshore renminbi bonds currently amount to 350 billion yuan, of which 280 billion are issued in Hong Kong.
