China's mainland and Hong Kong are transferring key personnel of its central bank, State Administration of Foreign Exchanges(SAFE) and Hong Kong Money Athority (HKMA), in an effort to promote the cross-border yuan trade and accelerate the process of yuan's internationalization.
Yi Gang, a former deputy governor of the People's Bank of China (PBOC), or the central bank, was appointed as the new head of SAFE, while SAFE's formal head Hu Xiaoliao became a deputy governor of the central bank, according to statements on the websites of SAFE and the central bank on Friday.
At the same time, Norman Chan has been appointed chief executive of HKMA for five years from October 1, while Under Secretary for Constitutional & Mainland Affairs Raymond Tam will succeed him as Director of the Chief Executive's Office from August 1.
Hu Xiaolian, currently 51, has served in PBOC as vice-president since August 2005, the same year when she took charge of SAFE.
Local newspapers reported that she would be in charge of PBOC's Monetary Policy Division. Further sources said that she would also handle the soon-to-be Monetary Policy Division II, which is designed to boost the cross-broder trades with yuan and accelerate the process of yuan's internationalization.
China earlier had signed 650 billion yuan of currency swap deals with six countries from Argentina to Belarus, in part to boost the amount of yuan being held overseas and pave the way for settling international trade in yuan.
China's central bank on July 2 released a rule allowing exporters and importers in five select cities to settle cross-border trades using the yuan.
According to these rules, the companies can use yuan, instead of the dollars currently used, to settle trade accounts with merchants in Hong Kong, Macao and Association of Southeast Asian Nations (ASEAN ).
The yuan trade pilot scheme kicked off on July 6 as three Shanghai companies completed cross-border trades with yuan.
It is the right time to promote the use of yuan in international settlement. The value of Chinese currency has been stable, and the Chinese economy has outperformed the rest of the world in the wake of the financial crisis, Ping Lian, chief economist with the Bank of Communications said on Monday.
Hong Kong, as one of the pilot city, has appointed new Monetary Authority Chief Executive on the same Friday.
Norman Chan, the ideal choice for HKMA's post, said the authority's top tasks include developing yuan business in Hong Kong, besides maintaining local monetary and banking stability, the normal functioning of credit markets and prudent management of the Exchange Fund.
Hong Kong companies want to use the yuan for trade because they expect it to appreciate against the US dollar by more than 3% annually, said Stanley Wong, deputy general manager at Industrial & Commercial Bank of China (Asia) Ltd.