Offshoring the Uncovered Liability Problem: Currency Hierarchies, State-Owned Settlement Banks and the Offshore Market for Renminbi

Figures & data

Table 1. Simplified Onshore and Offshore Financial System Assets and Liabilities.

	Assets	Liabilities
Onshore	Domestic Loans [Uncovered Liability: + Foreign Currency assets]	Domestic Deposits Foreign Currency Liabilities
Capital Controls: State Administration of Foreign Exchange (SAFE)
Offshore	Credit issued by offshore banks [-] RMB Bonds Issues by non-Financials [-] [Uncovered Liability: + RMB Claims on Chinese residents]	Offshore Deposits [ + ] Bank bonds held by non-financials [ + ]

Figure 1. China ForEx Reserves (US$ Billion, 1952–1976). Source: Data on Foreign Exchange (ForEx) Reserves are from Xin Zhongguo Wushi Nian Tongji Ziliao Huibian (1999).

Table 2: Renminbi Deposits, Hong Kong, Selected Indicators (2004–2019).

Year	Total RMB Deposits (million)	Approved Institutions	Trade Settlement	Ratio Trade Settlement to RMB Deposits
2004	12,127	38
2005	22,585	38
2006	22,722	38
2007	33,400	37
2008	56,061	39
2009	62,718	60	1,757	0.28
2010	314,938	111	263,238	0.84
2011	588,529	133	585,488	0.99
2012	602,996	139	702,474	1.16
2013	860,472	146	1,224,349	1.42
2014	1,003,557	149	1,772,857	1.72
2015	851,106	145	1,587,184	1.86
2016	546,707	144	987,651	1.80
2017	559,210	137	1,182,650	2.11
2018	615,017	136	1,113,741	1.81
2019	632,207	138	-	-

*Data refer to end quarter four.

Source: Financial Secretary’s Office (Hong Kong), Economic Report (Chapter 4).

Table 3. Financial TNCs by Assets and Geographical Spread.

Financial TNCs Ranked by Assets	Assets (US$ mill)	GSI Ranking	No. of Foreign Affiliates	No. of Host Countries
Industrial & Commercial Bank of China (ICBC)	4,009,505	18	32	21
China Construction Bank	3,400,455	48	17	11
Bank of China	2,992,088	41	29	19
JPMorgan Chase & Co.	2,533,600	21	235	43
HSBC Holdings Plc	2,521,771	7	398	49
BNP Paribas	2,338,949	6	372	57
Bank of America Corp.	2,281,234	39	261	35
Citigroup Inc.	1,842,465	31	80	27
Deutsche Bank AG	1,769,091	4	728	55

Notes: The GSI ranking is based on the banks rank in terms of its Geographic Spread Index. This is calculated as the square root of the number of foreign affiliates divided by the number of all affiliates and multiplied by the number of host countries.

Source: UNCTAD World Investment Report 2018.

Figure 2. Exchange Rate Indices (RHS) and Offshore Deposits (LHS), 2004–2020. Source: BIS Exchange Rate Database; Hong Kong Monetary Authority.

Figure 3. China All and Local Currency Claims of BIS Reporting Banks (US$bn). Notes: International bank claims are the sum of banks’ cross-border claims and their local claims denominated in foreign currencies. Local currency claims include the claims of branches or subsidiaries located in the reporting country whose activities are not consolidated by a controlling parent institution in another reporting country. This mainly comprises banking offices with a non-bank controlling parent institution. BIS, June 2016: 5–6.

Figure 4. Domestic RMB Financial Assets held by Overseas Entities (100 mill Yuan). Source: Peoples Bank of China, Money & Banking Statistics (货币统计概览) See: http://www.pbc.gov.cn/diaochatongjisi.

Figure 5. Flows RMB Loans, Foreign Currency Loans and Off-Balance Sheet (RMB, 100mill). Source: Peoples Bank of China, Aggregate Financing to the Real Economy (社会融资规模) http://www.pbc.gov.cn/diaochatongjisi.

Figure 6. Share of Foreign Banks Claims on NFCs (%) & FDI as a % GDP (2005–18). Source: The share of Foreign Claims on Non-Financial Corporate is calculated using quarterly data from Peoples Bank of China Annual Reports (2005–2017); FDI as a % of GDP calculated using quarterly data from the State Administration of Foreign Exchange http://www.safe.gov.cn/en/DataandStatistics/.

Figure 7. Non-Financial and Financial TNCs International Presence (2017). Notes: The TI Score for Non-Financial TNCs is calculated as the average of foreign assets to total assets, foreign sales to total sales and foreign employment to total employment and is averaged for each country/currency area. Financial TNC affiliates refer to the majority owned foreign affiliates of the top 50 Financial TNCs by foreign assets. The Internationalisation Index (II) score is calculated as the number of foreign affiliates divided by the number of all affiliates and is averaged for each country/currency area. Source: UNCTAD World Investment Report 2018.

Xin Zhongguo Wushi Nian Tongji Ziliao Huibian [XZWNTZH], 1999. (Comprehensive statistical data and materials on 50 years of New China). Beijing: Zhongguo Tongji Chubanshe.

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