|Lei Wun Kong||Calvin Tinlop Chui|
On March 7 2016, as China's 2016 plenary sessions of the National People's Congress and the National Committee of the Chinese People's Political Consultative Conference were underway, the Monetary Authority of Macau (Autoridade Monetária e Cambial de Macau, or AMCM) communicated in a press release that, after 15 months of preparation, the Macau Renminbi Real Time Gross Settlements (RMB RTGS) System has officially been put into action.
The launch of the RMB RTGS System not only provides settlement services for local and cross-border RMB fund transfers between banking institutions and their customers on a real-time basis – which is its function by definition – but also signifies Macau's commitment to becoming a RMB clearing platform for trade settlement between mainland China and Portuguese-speaking countries.
The groundwork for Macau becoming a RMB clearing platform started at an early stage of the RMB's internationalisation. In 2004, a year after Hong Kong received the first RMB offshore clearing bank, Bank of China Macau Branch was formally approved as the second RMB offshore clearing bank. Indeed, Macau had been quietly developing its RMB clearing services for some time. In a recent seminar, the deputy director-general of the liaison office of the Central People's Government in Macau reminded Macau's financial sector of its role in promoting Macau as an economic and commercial services platform between China and Portuguese-speaking countries. He further pointed out that the aggregate amount of settlements denominated in Chinese currency cleared via the region during 2015 reached RMB 1.57 trillion ($243 billion), a rise of 22.89% from previous year.
With the implementation of the RMB RGTS System, the transaction costs associated with the protracted clearing of fund transfers will certainly be reduced. This is a decisive factor for drawing in more businesses from China that trade with Portuguese-speaking countries, and vice-versa, for Macau's financial services. It is beyond anyone's doubt that such an addition to Macau's financial infrastructure is essential to pave the way for Macau to be the Sino-Luso RMB clearing platform. In addition, this news may have arrived at the perfect time, amid a downturn in the gaming sector and growing demand for economic diversification.
Lei Wun Kong and Calvin Tinlop Chui