Hong Kong and UAE Central Banks Collaborate to Strengthen Cross-Border Financial Infrastructure

The Hong Kong Monetary Authority (HKMA) and the Central Bank of the UAE have joined forces to enhance financial infrastructure and policies, aiming to facilitate cross-border payments and investments between their markets.

Eddie Yue Wai-man, CEO of HKMA, recently revealed that they are focused on promoting the use of the yuan among Middle Eastern companies in Hong Kong and attracting more family offices and sovereign wealth funds to invest in the region.

During a three-day trip to the UAE, Yue led a delegation comprising top bankers from HSBC, Standard Chartered, Bank of China (HK), and Citigroup. They met with officials from the UAE's central bank, financial institutions, companies, sovereign wealth funds, and family offices to foster collaboration and explore opportunities. Yue emphasized the need for increased promotion of Hong Kong's banking and investment services to Middle East investors, stating, "More should be done to promote these banking and investment services to Middle East investors."

Yue further elaborated on the trip's objectives, highlighting the intention of local lenders to introduce their services and products to encourage Middle Eastern investors to engage in trading yuan-denominated shares and dim sum bonds through Hong Kong. He stated, "We need to provide more yuan-denominated bonds, stocks, and other products for overseas investors to trade. It will encourage UAE and other Middle East companies to be willing to accept the yuan to settle their trade with Chinese companies."

The collaboration between HKMA and the Central Bank of the UAE includes the establishment of a working group to study policies and infrastructure for cross-border digital payments, trading of yuan products, regulations on virtual assets, and ESG financing. The Hong Kong Association of Banks is also working closely with its UAE counterpart on these developments.

Khaled Mohamed Balama, the UAE's central bank governor, expressed his interest in collaborating with HKMA and Hong Kong's financial services sector during a presentation by Hong Kong bankers on yuan, ESG, and other investment services. Balama's statement indicated support for UAE banks to promote Hong Kong's services and products, which was seen as a positive endorsement by Yue.

Yue highlighted the potential benefits of settling transactions in yuan instead of the US dollar, given the substantial trade relationship between China and the UAE. He pointed out the presence of over 6,000 mainland companies and 300,000 Chinese nationals in the UAE, emphasizing that promoting the internationalization of the yuan could boost cross-border trade and investment.

In terms of future initiatives, HKMA CEO Yue announced plans to lead a delegation to Saudi Arabia in July and visit Indonesia, Malaysia, and Thailand later in the year. Additionally, Hong Kong is set to host the 2023 Global Financial Leaders' Investment Summit and the Bank for International Settlements' (BIS) annual governors' meeting in November, events that aim to attract global heavyweights and showcase Hong Kong's financial development.

Yue emphasized the importance of hosting high-level financial events while continuing overseas roadshows to promote the yuan, ESG, and fintech services. He stated, "Besides having more overseas roadshows to promote the yuan, ESG, and fintech services in Hong Kong, it is also important to host high-level financial events to attract global heavyweights to come and witness our development."

Overall, the collaboration between the Hong Kong and UAE central banks aims to strengthen cross-border financial ties and create opportunities for increased trade and investments between the two markets.

By fLEXI tEAM