Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Jerome a Paris:
banks' clearing accounts (Aggregate Balance) maintained with the HKMA for the purpose of clearing and settling transactions between the banks themselves, and also between the banks and the HKMA
plus the fact that the HKMA maintains foreign reserves in an amount sufficient to back all the monetary mass of Hong Kong means that it fulfills all the functions of a central bank even if it isn't called a central bank.

Can we please step away from the nominalist debate for a bit and just look at the functions of the institutions?

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Carrie (migeru at eurotrib dot com) on Mon Jun 7th, 2010 at 09:31:44 AM EST
[ Parent ]
HKMA Infrastructure

Central Moneymarkets Unit

The Hong Kong Monetary Authority (HKMA) established the Central Moneymarkets Unit (CMU) in 1990 to provide computerised clearing and settlement facilities for Exchange Fund Bills and Notes. In December 1993, the HKMA extended the service to other Hong Kong dollar debt securities. It offers an efficient, safe and convenient clearing and custodian system for Hong Kong dollar debt instruments. Since December 1994, the CMU has been linked with other regional and international systems.  This helps to promote Hong Kong dollar debt securities to overseas investors who can make use of these links to participate in the Hong Kong dollar debt market.

The CMU service was further extended to non-Hong Kong dollar debt securities in January 1996.  In December 1996, a seamless interface between the CMU and the Hong Kong dollar Real Time Gross Settlement (RTGS) interbank payment system was established. This enables the CMU system to provide real-time and end-of-day Delivery versus Payment (DvP) services to its members.  

The CMU was further linked to the US dollar, euro and Renminbi RTGS systems in December 2000, April 2003 and March 2006 respectively to provide real time DvP capability for debt securities denominated in those currencies and also intraday and overnight repo facilities for the US dollar and euro payment systems in Hong Kong.

The key point is that according to the definitive Hong Kong Payment Systems document there is no central counterparty whether named a Central Bank or not.

The Central Moneymarkets Unit (CMU) is a membership entity; acts as a custodian; provides no guarantee; and takes no credit risk. (see pages 122 onwards).

As you know, a custodian is a key element of the P2P finance architecture I advocate.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Jun 7th, 2010 at 01:07:11 PM EST
[ Parent ]
To understand why this is not a central bank, could you give a definition of central bank structure (with picture if possible) so that the difference becomes clear?

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Tue Jun 8th, 2010 at 05:49:59 AM EST
[ Parent ]


Occasional Series