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Bank of China (Hong Kong) is described as the "sole Clearing Bank for RMB business in Hong Kong"

What does it mean to be a clearing bank and clearing bank for RMB?

What's the difference between Bank of China (Hong Kong) and other Commercial Banks or Investment Banks in Hong Kong?

Thanks!

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Clearing means processing unsettled transactions. Specifically - all the money transfers between the banks, in this case.

Clearing Bank for RMB business means that all RMB transactions will be cleared through that specific bank. If bank A in Hong Kong gets a check drawn on Bank B in Hong Kong, and the check is in RMB - A will go to the BoC with the check and will get the money, and BoC will take the money from B. That obviously requires both A and B have accounts with BoC.

"Sole" clearing house means there's only one. I.e.: in our example, A and B cannot settle the check through C where they both happen to have accounts, or directly with each other. They MUST utilize the services of BoC.

  • Thanks for the reply. So it seems like, the advantage could be... <br/> -The Clients of Bank A and Bank B whom transacts RMB will just directly open an account with BoC-HK. This could be because the clearing time or cost is lower if the Clients have a direct account with BoC-HK? <br/> -Thus the advantage of being a clearing bank could mean BoC-HK is able to attract more clients that needs to transact RMB? – jack Jul 23 '14 at 8:34
  • @jack no, the advantage is having full control of RMB operations. The individual customers don't really care. – littleadv Jul 23 '14 at 16:01
  • So... supposed there are commercial/retail clients, and they only transact RMB. Compared to having an account at the RMB clearing bank (ie, BoC-HK) and RMB non-clearing bank (ie, Hang Seng), there is no advantage to having an account at the RMB clearing bank? – jack Jul 23 '14 at 16:54
  • @jack none whatsoever. – littleadv Jul 23 '14 at 18:20

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