China and HK central banks close to finalising new CNH clearing arrangement
Market participants are close to completing the legal and operational details relating to a new custodian account arrangement that would allow the city's participating banks in offshore renminbi to take credit risk against the People's Bank of China rather than with clearing bank, Bank of China (Hong Kong).
The People's Bank of China (PBoC) and the Hong Kong Monetary Authority (HKMA) are close to finalising an additional arrangement to the current renminbi clearing and settlement arrangements for banks operating offshore renminbi business in Hong Kong. This is aimed at alleviating concerns about credit risks associated with excess liquidity from client deposits being held with the clearing bank, Bank of China Hong Kong (BOCHK). The new arrangements would include custodian accounts facing the PBoC
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