The People's Bank of China (PBOC), China's central bank, announced Wednesday that mainland financial institutions can issue Renminbi (RMB) financial bonds in Hong Kong with ratification from the central bank.

A spokesman for the PBOC said that the central bank will provide clearing arrangement for capital raised through the bond issuance.

He said the State Council has approved the expansion of RMB business in Hong Kong, adding that the new business will be launched following necessary technical preparations.

The opening of the business will further expand the channel for RMB in the hands of Hong Kong residents and companies to flow to the mainland, hence increasing economic exchanges between the mainland and Hong Kong and reinforcing Hong Kong's status as an international financial center, he said.

Statistics from the central bank show that RMB business has been developing in an orderly way since it was first opened in 2004. By the end of November 2006, 38 banks in Hong Kong had opened RMB business, with an outstanding RMB deposit of some 22.8 billion yuan (2.92 billion U.S. dollars).

To ensure an orderly and smooth progress of the new business, the spokesman said at this stage only high-rating policy and commercial banks in the mainland are allowed to issue RMB bonds in Hong Kong, for which the central banks has formulated a provisional procedures to supervise the new business.

Source: Xinhua