The new Cheque Imaging & Truncation System will come into operation on June 21. The system will turn the clearing process from physical exchange of cheques into an image-based method.

Under the new system, low-value cheques will be exchanged and cleared on the basis of electronic presentation of cheque images and the relevant cheque data.

This will mitigate the need for banks to deliver physical low-value cheques for clearing and settlement.

The higher value cheques and special items, such as suspicious cheques, regardless of value will still be physically presented together with their images to the paying banks.

Customers will continue to enjoy the same level of service after the adoption of the new system.

Monetary Authority Chairman Joseph Yam said the implementation of the new system is an important step in modernising the cheque processing infrastructure in Hong Kong.

The new system will be able to streamline the operation and enhance the efficiency of cheque clearing in Hong Kong, Mr Yam said.

The Association of Banks has commissioned Hong Kong Interbank Clearing Limited to implement the system on an industry-wide basis.

The association's chairman Raymond Or said automating the cheque clearing process will reinforce Hong Kong's position as a dynamic, global financial centre.

No additional fees will be charged as the cost of implementing this new technology will be borne by banks, Mr Or said.