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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!
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.
