Hong Kong’s banks will be able to conduct more renminbi business for corporate clients and local companies will be encouraged to issue renminbi-denominated bonds according to new rules announced by the territory’s monetary authority, the South China Morning Post reported. At present, only trading firms are permitted to open renminbi accounts, but this privilege will be extended so that any Hong Kong or overseas company can settle trades using the Chinese currency. Companies will be allowed to apply for bank loans of lines of credit in renminbi for project finance purposes and also issue bonds in renminbi, an activity currently restricted to mainland financial firms. The reforms come with two restrictions attached: Chinese currency raised in Hong Kong through these activities cannot flow back to the mainland without approval from Beijing; and the proceeds of any trades or bond issues cannot be used for speculation in the equities or property markets.
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