The latest move by the Hong Kong Monetary Authority enhances the city's capability as a regional payment settlement hub. Photo: HKEJ
Hong Kong links US dollar settlement system with Thai baht
The Hong Kong Monetary Authority and Bank of Thailand have launched a cross-border payment-versus-payment (PvP) link between the real-time gross settlement system for US dollar in the city and that for Thai baht in the country, the Hong Kong Economic Journal reported on Tuesday.
The linkage is the third such move by the HKMA in Asia, after those in Malaysia and Indonesia, enhancing the city’s capability as a regional payment settlement hub, HKMA deputy chief executive Peter Pang was quoted as saying. The payment settlement system also covers the Hong Kong dollar, euro and renminbi.
The PvP link with the Thai central bank recorded 14 counts of settlements on its debut, involving a combined US$39 million.
The linkage aims to eliminate settlement risks in foreign exchange transactions between the two currencies by ensuring the simultaneous delivery of US dollar in Hong Kong and Thai baht in Thailand, Pang said, adding that operational efficiency in settling those transactions will also be improved in a coordinated manner during Asian hours.
Lenders in Hong Kong may find new correspondent banking opportunities of serving banks in Thailand with the new link.
US dollar-Thai baht foreign exchange transactions accounted for 75 percent of the total amount of forex transactions in Thailand last year.
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