Payment network enhances linkage

CHINA'S mainland and Hong Kong will connect their foreign-currency payment and clearing systems from next Monday to cut cross-border payment risks and costs, the People's Bank of China said yesterday.

Mainland banks can make cross-border payments and settlements in Hong Kong dollars, United States dollars, euros and pounds through the connected network, based on a memorandum between China's central bank and the Hong Kong Monetary Authority, the PBOC said. Settlements in more currencies will be allowed based on market demand. The linkage will improve "multi-currency payment efficiency" and also "capital turnover efficiency of participating banks," it said.

Four mainland banks - China Construction Bank, the Bank of China, the Industrial and Commercial Bank of China, and Shanghai Pudong Development Bank - will become the first to carry out such settlements. The branches of CCB, BOC, ICBC and Citibank (Hong Kong) Ltd have been appointed as the Hong Kong agent banks for the mainland lenders.