Scholars from City University of Macau make suggestions on the development of an RMB-denominated securities market and Macau’s modern financial sector
The Symposium on the Development of an RMB-Denominated Securities Market and Macau’s Modern Financial Sector, co-organized by the Faculty of Finance of the City University of Macau (CityU) and the Research Center for Macau Social and Economic Development, a key research (partnership) institute of humanities and social sciences of the Ministry of Education, was successfully held today (22nd) on the Taipa campus of CityU in celebration of its 40th anniversary. Professor Ip Kuai Peng, Pro-Rector and Director of the Research Center, pointed out that China’s 14th Five-Year Plan had explicitly charted the development course for Macau, namely a city of “traditional Chinese medicine manufacturing, characteristic finance, and high-tech sectors”. As part of Macau’s moderately diversified economy, the financial sector can be integrated with the in-depth cooperation between Guangdong and Macau and the construction of the Commercial and Trade Cooperation Service Platform between China and Portuguese-speaking Countries. In so doing, Macau will integrate itself into the overall picture of national development more actively.
Pro-Rector Professor Ip Kuai Peng and his research team members, Dean of the Faculty of Finance Cheung Wai Kong, Associate Dean Khong Yueng Wah, Course Coordinators Wu Zefu and Lin Deqin, Associate Professors Wang Yinggui and Lou Shiyan, and Head of the Research Management Office Sheng Jian, spoke at the symposium. Other team members attending included research fellows Chan Pui I and Xiao Mingyu.
Ip Kuai Peng said that Guangdong Province had recently released pivotal documents to underpin the construction of a modern and international Special Economic Zone in Zhuhai, taking modern finance as one of the key sectors in spurring the construction of an in-depth cooperation zone among Hengqin, Guangdong and Macau. In this regard, Macau should seize the opportunity, work with Zhuhai to develop the financial sector, promote financial cooperation between the two places, enhance the level of cross-border financial services, improve the finance-backed innovation system, capitalize on Hong Kong and Macau’s capital and international financing ability, and provide funding and capital markets for scientific and technological innovation in the Guangdong-Hong Kong-Macao Greater Bay Area. Previously, there have been 18 cross-border financial institutions involving Macau in the Guangdong-Macau Cross-Border Financial Cooperation (Zhuhai) Demonstration Area. Next, we can also try to sell cross-border financial products, promote the interconnectivity of financial institutions between Hengqin and Macau, and introduce supporting measures to attract relevant financial talents as soon as possible.
Ip Kuai Peng added that Macau should give full play to its role of a Commercial and Trade Cooperation Service Platform between China and Portuguese-speaking Countries, capitalize on its natural links with Portuguese-speaking countries, and expand markets in the European Union, Latin America and Africa through Portugal, Brazil, Mozambique and Angola. In addition, Macau needs to pool high-quality international financial resources and promote two-way opening-up and cooperation. In particular, the function of the financial service platform between China and Portuguese-speaking countries should be cemented, so as to boost the development of modern financial business such as financial leasing, RMB clearing between China and Portuguese-speaking countries and wealth management. Thus, Macau can achieve coordinated development together with its neighboring regions. By building an RMB-denominated securities market in the Guangdong-Macau “intensive cooperation zone” in Hengqin, we can create an RMB settlement center in Portuguese-speaking countries, strengthen the interconnectivity of the bond markets between Macau and mainland China, and facilitate the development and internationalization of RMB offshore markets.
Cheung Wai Kong argued that with the rapid development of the Greater Bay Area and the rise of foreign economic activities, the demand for related payment and settlement is set to soar. Macau can give full scope to RMB clearing on two fronts to assist in the construction of the Greater Bay Area. First, Macau can optimize clearing and payment services by reducing payment costs, cutting time, enhancing convenience, and simplifying the opening, linking, and transaction limit of cross-border accounts. Second, it can provide tax, security, and cost incentives to draw institutions and individuals from the Greater Bay Area and overseas to make cross-border payments and clearing in RMB in Macau.
Khong Yueng Wah noted that the financial sector is one of the four pillars of Macau’s economy. Apart from the knowledge and experience of Macau’s local financial sector, cross-border and cross-disciplinary exchanges and training will be the leading direction for the development of financial talents. The Faculty of Finance of CityU works closely with relevant departments of the Macau SAR Government, banking and insurance industries to cultivate modern financial talents both on campus and on the job, giving full play to its role of a financial knowledge base. By adhering to the principle of industry-university-research cooperation, the Faculty actively promotes the research of modern financial programs and frontier issues with relevant financial industries and academic institutions, in a bid to offer platforms and opportunities for fostering new interdisciplinary financial talents.
Wu Zefu pointed out that three major problems need to be addressed to give full play to the function of Macau as an important RMB clearing hub, including enlarging Macau’s RMB capital pool, sharpening its competitive edge as an international financial center, and improving Macau’s financial infrastructure. Efforts are needed to keep improving the two-way financing mechanism for cross-border funds, conduct business such as RMB trade financing, cross-border RMB loans, and RMB loans for overseas projects, and promote macro-prudential management policies on cross-border financing. We should also support multinationals in carrying out centralized operation and management of RMB and foreign currency funds, so that financial institutions and enterprises in Guangdong and Macau can leverage domestic and foreign financial markets to efficiently distribute and utilize financial resources.
Lin Deqin remarked that Macau’s role as an RMB clearing center in Portuguese-speaking countries and regions will contribute to the internationalization of the RMB. Macau should actively carry out RMB settlement business for economic and trade exchanges between China and Portuguese-speaking countries and improve the RMB return mechanism. In addition, more trading and risk management tools will be provided in the future, and we will explore more products based on RMB interest rates and exchange rates, develop hedge financial products, especially derivatives of exchange rate and interest rate spreads between offshore and onshore RMB, and bolster the development of offshore RMB investment channels, investment and financing business.
According to Wang Yinggui, looking to the future, Macau’s financial services sector needs to sharpen its competitiveness in terms of product and service innovation and the application of fintech. First, Macau’s financial services sector should focus on developing its wealth management business and exploring tailor-made wealth management products according to the specific needs of individual customers from mainland China. Second, Macau should fully improve its digital services in the financial sector, and make use of digital platforms to swiftly connect banking services, product information and research services. Macau’s banking industry should launch fully virtualized wealth management accounts and harness advanced digital security and other technologies to improve network security.
Lou Shiyan stated the belief that the construction of an RMB digital stock exchange in Macau enjoys institutional advantages like “One Country, Two Systems”, policy advantages such as the support from the central government and the Macau SAR Government, and advantages of dual circulation and the integration of Hong Kong and Macau into the overall picture of national development. The Macau SAR Government takes green finance as its leading and characteristic product, and develops financial lease bonds and green bonds, but the related innovation in financial products and services, as well as innovation in risk-aversion products for investors, needs continuous improvement. In addition, efforts should be made in the fields of talent, capital, technology and trading systems, financial ecology, and related supporting facilities.
Sheng Jian concluded that Macau needs to work on the supply side and introduce financial products alluring to residents and enterprises, thus facilitating the development of the RMB-denominated securities market, and encouraging scholars and experts to continue to conduct further and in-depth research in the local modern financial sector.
