eddie yue : renminbi – a new era and the role of hong kong keynote address by mr eddie yue, deputy chief executive of the hong kong monetary authority, at the global offshore rmb funding forum 2012, hong kong, 23 may 2012. * * * tony ( shale ), mark ( johnson ), distinguished guests, ladies and gentlemen, thank you for being here this morning, and thanks to euromoney for inviting me to speak at this “ global offshore rmb funding forum ”. it ’ s indeed an honour to have this opportunity to discuss this important topic in such distinguished company. i understand that we will have a very comprehensive programme today, with editors, economists, bankers and financiers talking about the exciting developments of dim - sum bonds and other innovative products in the offshore rmb markets. by way of opening the dialogue, i ’ d like to focus my remarks on the bigger picture, and on three things in particular : first, the scale of change in the global economy, which is the backdrop for our discussion ; second, the expanding role of the rmb, past and future ; and third, the impact this all has on our role and opportunities here in hong kong. china ’ s increasing integration with and contribution to the world economy so, first, the scale of change. the foundation for any discussion on the role of the rmb, of course, is china ’ s growing economy. now, we ’ ve all become very familiar with breathless reports on china ’ s “ economic miracle, ” so i won ’ t go over this at length. still, the startling pace of growth does warrant underlining. in a little over a decade since the year 2000, the mainland ’ s nominal gdp increased sixfold from 1. 2 to 7. 2 trillion us dollars ; and its external trade expanded more than sevenfold, from less than 500 billion to over 3. 6 trillion us dollars. at the same time, its cross - border direct investments rose fourfold, from just over 40 billion to approaching 180 billion us dollars. these are all impressive indicators of the vast amount of business opportunities present. it is perhaps even more astonishing that, by 2016, the mainland is expected to contribute over a third of total world economic growth, according to the projections of the international monetary fund. change in the international financial system such shifts in the global economy have inevitably foreshadowed a change in the international financial system. as the mainland economy has grown, its currency and financial

mainland ’ s external trade and accounts for some 60 % of cross - border direct investments in both directions. against this backdrop, hong bis central bankers ’ speeches kong is well - placed to serve as a key commercial and financial gateway, continuing to facilitate trade as it expands and is increasingly conducted in rmb. through its long history as an international financial centre, hong kong has built up the necessary infrastructure to support a growing rmb market. indeed, hong kong has been steadily gearing up its capability to handle rmb servicing since it started back in 2004. this is what has enabled hong kong to become a global hub for offshore rmb businesses. hong kong today provides the largest and most effective platform for the complete range of rmb transactions, from banking and financing to asset management, at both customer and wholesale levels. just to give an illustration of hong kong ’ s status as a global rmb hub, consider its recent record : rmb deposits in hong kong, including certificates of deposits, grew by a factor of ten between end - 2009 and march 2012, from around rmb 60 billion to over rmb 660 billion yuan. rmb trade settlement transactions handled by banks in hong kong has also increased phenomenally, from less than rmb 2 billion yuan in 2009 to nearly rmb 2 trillion yuan in 2011. over the same two - year period, the hong kong rmb dim - sum bond market has seen issuances growing from rmb 16 billion to rmb 108 billion yuan. i know many of you have come here today to hear more about how to tap into this rapidly developing market to finance your business in the future. now of course, as a global hub, it does not mean that all offshore rmb businesses are to be conducted only in hong kong. quite the contrary. as rmb becomes more widely used and accepted by trading companies and investors worldwide, it is natural to see financial institutions providing rmb services to meet the demand of their customers. that said, even as its role evolves over time in line with market changes, we do see hong kong continuing to be an ideal place for companies to conduct their rmb banking and financing activities. in addition, hong kong will develop its ability as a rmb hub to serve a growing network of financial institutions around the world. and in this last respect we are seeing real signs of development. more foreign banks are either choosing to have a base in hong kong or are using rmb correspondent banking services provided by banks in hong