Hong Kong central bank refines green finance benchmarks

HONG KONG – Strengthening its environmental credentials, Hong Kong’s de facto central bank recently donated 100 green and pink lunch boxes to its employees in a bid to reduce plastic waste and raise awareness of environmental issues.

But the Hong Kong Monetary Authority does more than just hand out food containers to its staff. As part of an effort to embrace green finance, the HKMA last year launched a joint committee with securities supervisors to urge companies to disclose financial information on climate change and push them to issue more green bonds using grants.

“The qualities of an international financial center can be summed up in two words: opportunity and ecosystem,” said Eddie Yue, CEO of HKMA. “Hong Kong’s opportunities can be summed up in three words: China, green and technology. “

The “one country, two systems” framework is applied in Hong Kong, and it is the HKMA, and not the People’s Bank of China, that is responsible for the stability of the territory’s currency and its financial system. Beijing has said it will maintain this formula until 2047, after which the future of the HKMA will depend on the status of the territory.

Eddie Yue, Managing Director of the Hong Kong Monetary Authority, considers “China”, “green” and technology “as the watchwords of the financial center.

Although the HKMA is a member of the Bank for International Settlements, the authority does not effectively conduct its own monetary policy – instead, it pegs the Hong Kong dollar with the greenback. It also leaves the issuance of banknotes to private banks such as HSBC and Standard Chartered.

Overshadowed by mainland China with a population of just 7.4 million and no natural resources, Hong Kong must use its financial expertise to stay relevant alongside mainland China.

The HKMA is also ahead of its global competitors when it comes to digitization. She began researching a central bank digital currency in 2017, and two years later launched a joint CBDC research project with the Bank of Thailand, which the PBOC joined in February. It also plans to set up a virtual bank.

Central banks around the world, including the US Federal Reserve, the European Central Bank, and the Bank of Japan, have goals such as stable prices and full employment. Some observers criticize central banks’ adoption of climate change measures because it can be seen as intervention in certain industries.

That said, central banks around the world are fighting for supremacy over green finance and digital currencies as they seek to take the lead in setting the rules for new financial transactions.

Earlier this year, the Hong Kong government issued a 30-year green bond in conjunction with the HKMA, making it the first government institution to do so in Asia. The government plans to issue green bonds worth HK $ 175.5 billion ($ 22.5 billion) over the next five years and hopes to make it a market benchmark.

Hong Kong moved up a notch to third place from the previous survey in the latest index of global financial centers compiled by Z / Yen Group, a London-based think tank.

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