Curb on U.S. dollar trading in Hong Kong may damage global confidence in U.S. assets: HK finance chief

Chinese, left, and Hong Kong flags are displayed outside the Central Government Offices in Hong Kong, China, Saturday, Oct. 4, 2014. A week into demonstrations in Hong Kong notable for their order and endurance, protesters came under attack from opponents, highlighting the fault lines of a city torn between commercial interests and a desire for greater democracy. Photographer: Tomohiro Ohsumi/Bloomberg via Getty Images

On concerns over threatened sanctions on Hong Kong by the United States, Hong Kong’s finance chief believes that the United States will also suffer from damaged global confidence in the U.S. dollar and U.S. financial assets.

HONG KONG, June 7 (Xinhua) — Financial Secretary of China’s Hong Kong Special Administrative Region government Paul Chan said on Sunday that to limit U.S. dollar trading in Hong Kong will in return damage global confidence in the U.S. dollar and U.S. financial assets.

Extreme measures, such as restricting Hong Kong using the U.S. dollar or the settlement system, are also highly risky to the United States itself, the Hong Kong finance chief wrote in an online article in response to concerns over threatened sanctions by the United States.

Any move to rattle the financial system of Hong Kong, which is the third largest U.S. dollar trading center in the world, will also have an enormous impact on global financial markets, Chan noted.

Hong Kong is closely connected to global economic and financial systems, and provides investment, wealth management, trade and settlement services to numerous businesses from Asia-Pacific and other parts of the world, he wrote.

The United States has recently threatened to slap sanctions on Hong Kong after China’s national legislature adopted a decision to make the national security legislation for Hong Kong.

Chan reiterated that the actual impact of the so-called sanctions will be very limited and that other global financial centers also have their own national security laws.

He wrote that he remains optimistic about Hong Kong’s status as a global financial center as it has been supported by businesses and capital from the Chinese mainland with closer financial ties and has been increasingly recognized by global investors.

In the article, Chan also noted the Hong Kong’s unique advantages under the “one country, two systems” principle.