Chan Tak-lam, chief executive of the Hong Kong Monetary Authority (HKMA), at a Friday news conference in Beijing following a meeting with mainland regulators, said that "China's cross-border trade settled in the yuan will likely double in the next five to seven years," the China Daily reported.
Yuan-denominated foreign trade accounts for 15 to 20 percent of China's total trade, and that percentage will likely rise to 40 to 50 percent, indicating more acceptance of the yuan among international traders and investors, the HKMA head said.
Chan also told the press that he is expecting financial institutions in Hong Kong to introduce more yuan-denominated products to meet investors' demand for the yuan.
Sales of products such as exchange-traded funds associated with the Chinese mainland's A-share market are growing rapidly, he said.
From January to October, Chan added, yuan-denominated trade settlement in Hong Kong grew significantly. Offshore yuan trading doubled to the equivalent of $30 billion in the same period.
Hong Kong is the world's largest offshore yuan market, with deposits of the currency now in excess of 1.1 trillion yuan, about half of the total offshore yuan globally.
Continuing his report to the press, Chan said that the demand for offshore yuan increased after last Monday's launch of the landmark stock trading program linking Shanghai and Hong Kong. To meet rising demand, the HKMA removed the daily conversion limit of 20,000 yuan ($3,262) for its residents.
Chan said that he called for an expansion of quotas for the renminbi qualified institutional investor program, which allows certain overseas institutions to use yuan to invest in the mainland's capital market, since the current quota of 270 billion yuan allocated to Hong Kong can no longer meet demand and the region hoped that mainland regulators would raise the quota as soon as possible.
According to him, they got "a positive response" on the issue from the mainland's monetary authorities.
For now, Hong Kong does not expect a direct threat from the rise of other international yuan clearing and settlement centers like London and Singapore.
Chan said: "Our relationship with other offshore yuan centers is a mutually beneficial one as we intend to jointly grow the pie of yuan business."