BEIJING, Oct. 13 -- The Central Government had agreed in principle to expand the yuan-denominated businesses of Hong Kong banks, including raising exchange limits, Hong Kong's Chief Executive Donald Tsang said in his maiden policy address Wednesday.

Hong Kong banks have been providing personal yuan banking services since February 2004 and lenders such as Bank of East Asia, Standard Chartered and HSBC Holdings currently offer yuan deposit, exchange and remittance services.

In principle, the Central Government had agreed to raise the exchange limits per person per transaction, lifting credit limits on yuan cards issued by Hong Kong banks, relaxing remittance limits on local residents and extending yuan settlement to merchants in more sectors, Tsang said.

It will also allow merchants to open yuan cash deposit accounts and exchange those deposits to Hong Kong dollars. It had also agreed to a new business that would allow Hong Kong residents to use yuan-denominated cheques for consumer spending in the neighboring Guangdong Province, he said. Enditem

(Source: Shenzhen Daily/Agencies)