The Chinese mainland is studying plans to allow Hong Kong insurers to invest in its interbank bond market and for mainland companies to issue yuan bonds in Hong Kong, as part of efforts to internationalize its financial markets and the yuan, Reuters reported on Dec 1, citing Hong Kong's central bank chief.
"If Hong Kong insurance firms sell yuan-denominated premiums and have investment needs for the yuan, one of the possibilities is to take part in the interbank bond market," Hong Kong Monetary Authority Chief Executive Norman Chan said on Dec 1.
"That will be positive for the development of Hong Kong's insurance products," Chan told a news conference during a trip to Beijing.
Chan added that the People's Bank of China and the China Insurance Regulatory Commission were studying the interbank bond scheme, while the National Development and Reform Commission was looking at the plan for mainland companies to issue yuan bonds in Hong Kong.
China is promoting Hong Kong as an offshore yuan market, leading companies such as McDonald's Corp and US heavy equipment maker Caterpillar Inc to issue yuan-denominated bonds.
Banks are also creating new structured products and more Chinese importers are settling trade in yuan, also known as the renminbi. Chan, who is in Beijing this week with a banking delegation, said earlier in the week that Hong Kong would significantly increase the number of companies that could use yuan to pay for imports and exports.
