11.30.08, 01:35 AM EST
HONG KONG, Nov 30 (Reuters) - Hong Kong's central bank said on Sunday it hoped to further develop Chinese currency business in the city but declined comment on a report saying China was considering currency swaps with Hong Kong and allowing Hong Kong banks to issue yuan bonds.
'We do not comment on individual reports,' a spokesman for the Hong Kong Monetary Authority (HKMA) said.
The South China Morning Post newspaper on Saturday quoted officials at the People's Bank of China (PBOC), China's central bank, as saying Beijing was considering allowing currency swaps with Hong Kong to help the city weather the financial crisis.
The report said China was also studying expanding Chinese currency business in Hong Kong; using the city as a centre for trade settlement between Taiwan and mainland China; and allowing Hong Kong banks incorporated in China to issue yuan-denominated bonds in Hong Kong.
HKMA Chief Executive Joseph Yam said earlier this month that Hong Kong had sent a signal to Beijing that it wanted to become a settlement centre for yuan business and that any yuan business between China and Taiwan should go through Hong Kong.
Last week, Yam repeated his view that China should expand the issue of yuan bonds in Hong Kong. At the moment only Chinese financial institutions can issue yuan-denominated bonds in the city.
The introduction over the past few years of yuan-denominated bonds and other Chinese currency business in Hong Kong is seen as Chinese policy to use the city as a testing ground for gradual liberalisation of China's currency, which is not fully convertible