The launch of Renminbi sovereign bonds in Hong Kong on Monday shows China's efforts to boost the international use of the yuan step by step, officials and analysts said.
The bond issue, worth only 6 billion yuan (878.5 million U.S. dollars), marked a key milestone in the internationalization of the RMB.
Hong Kong was chosen for, and will benefit from, the milestone bond sale thanks to its unique position as the international financial center providing desired cushion against the potential risks when the program was launched, analysts said.
BOOSTING INTERNATIONAL USE OF RMB
The bond issue in Hong Kong came earlier than expected, said Hu Yifan, an economist with CITIC Securities.
"The need for the RMB to go international and convertible has been growing along with the increasing importance and openness of the Chinese mainland economy and the risks arising from over- reliance on the United States dollar as the reserve currency," said Tse Kwok-leung, head of economic research of Bank of China ( Hong Kong) Limited.
China has been launching pilot RMB programs over the years, but the pace has obviously quickened since the onset of the global financial crisis. Pilot RMB programs launched in Hong Kong over the past 12 months also included yuan-denominated cross-border trade settlement and trade financing, yuan bonds issued by policy banks, commercial lenders and the branches of foreign banks, and currency swaps.
The sovereign bond issue would help "boost the international use of the RMB in a steady and orderly manner," the Chinese Ministry of Finance quoted Acting Chief Executive of the Hong Kong Special Administrative Region (HKSAR) Henry Tang as saying.