While the UK is strengthening its ties with the US financial services sector and deepening the dialogue over regulation, Whitehall has also reached out to Hong Kong in a similar bridge-building exercise.
Earlier this month, Economic Secretary to the Treasury, John Glen, and Secretary for Financial Services and the Treasury, James Lau, concluded the inaugural UK-Hong Kong Financial Dialogue in London. At the event, they committed to enhance bilateral policy and regulatory co-operation, just as the US and UK agreed to do at the US-UK Financial Regulatory Working Group in Washington last week, a meeting that saw the announcement of the new transatlantic Financial Innovation Partnership.
As part of the protracted Brexit process, the UK is strengthening ties with governments outside of Europe, while reaching out across the globe with a variety of Expert Missions in new technology areas, such as AI and robotics, run by Innovate UK and the Knowledge Transfer Network. Among other countries, they have visited South Korea, China, Japan, and the US – negotiations that have been complicated by the ongoing trade war between the US and China.
The Eighth London-Hong Kong Financial Services Forum also took place this month, co-chaired by HM Treasury’s Director-General of Financial Services, Katharine Braddick and the Hong Kong Monetary Authority’s (HKMA) Executive Director (External), Vincent Lee.
The Forum included roundtable discussions on issues such as bilateral collaboration on renminbi (RMB) internationalisation, the opening-up of capital markets in China, green finance, infrastructure investment, cybersecurity, crypto assets, and new growth opportunities for FinTech.
Hong Kong holds the largest pool of offshore RMB deposits – RMB 649 billion ($94 billion) as of end February 2019 – and processes more than 70 percent of RMB transactions globally. The UK has the largest share of RMB payments outside of Hong Kong and the most active RMB foreign exchange transactions, representing 36.7 percent of global volumes.
Both sides recognised the important role played by the banking sector in promoting UK-Hong Kong financial collaboration. Regulators agreed to maintain a close dialogue, exchange supervisory information, and discuss issues of mutual interest to maintain stability in, and promote the development of, their banking sectors.
Both sides also noted the recent announcement from the UK Investment Association and the Hong Kong Investment Funds Association that they will collaborate to foster closer relationships between the asset management industries in both markets.
As for FinTech, both sides welcomed the increased regulatory and commercial cooperation that has resulted from the Hong Kong-UK FinTech Bridge agreement, which was signed in 2017. Within this, a pilot programme is providing tailored support to 10 UK companies entering the Hong Kong market.
New initiatives to deepen the Bridge agreement were announced at the meeting, including the establishment of a new FinTech Bridge Dialogue as part of Hong Kong FinTech Week. The Department for International Trade (DIT) pledged to deepen its collaboration with key Hong Kong partners, including the Hong Kong Science and Technology Park, and explore the possibility of formalising these partnerships further.
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