Eddie Yue: Towards RMB internationalisation - the role of Hong Kong markets Opening keynote speech by Mr Eddie Yue, Chief Executive of the Hong Kong Monetary Authority, at the Hong Kong Institute of Bankers (HKIB) Annual Banking Conference 2021, 29 September 2021. * * * Distinguished guests, members and friends of Treasury Markets Association (TMA), ladies and gentlemen, 1. Thank you for having me at this event. It is my pleasure to deliver my keynote speech at the Treasury Markets Summit 2021. Opening 2. We should all take it as a blessing that against the shadow of the pandemic, we could still host this annual event today to exchange views. The pandemic has brought profound and lasting changes to our lives, but not all of them are negative. I notice for instance that several people around me have been hiking more frequently during the pandemic and even maintained it as a habit. It is beautifully ironic that during this period of restrictions, we have had the opportunity to be outdoor more often and to interact with nature. As we enjoy and rediscover the astounding scenery and diversity of our landscape, it is difficult to not appreciate the harmony in nature or, if you prefer a more precise description, the harmony in the co-existence and interdependence of living organisms. One example is the bee and the flower: the bees need flowers for food and flowers depend on the bees for pollination. They live in harmony by helping each other survive and evolve.
All these facts and numbers suggest that Hong Kong has the strongest foundation on which we can launch further efforts to advance the progress of RMB internationalisation. 10. The timing is also right – with the Mainland’s economic growth continuing to outperform. Macro aside, portfolio flow is another major driver. We are seeing increasing capital flows into the Mainland markets by international investors, driven by the inclusion of RMB assets in global indices and also the attractive yield pick-up and diversification benefits. In the other direction, there is also an increasing need for Mainland investors – be they individuals or institutions – to more efficiently manage their wealth and diversify the allocation through outward investments. A good part of these two-way portfolio flows will be conducted in RMB, and through Hong Kong. Some thoughts on “How” 11. So far, the level of the international use of RMB remains relatively low, and is not commensurate to the Mainland’s economic strength. For example, the Mainland is already the world’s largest trading nation, but the use of RMB for cross-border trade settlement is only in the range of 15 to 20% of its total trade volume. Some will argue that in order to 2/4  BIS central bankers' speeches  further boost the usage of RMB in trade settlement, we will need to see more active use of RMB as an investment currency in capital market transactions.