MMM INTERNATIONAL UK and China Start Direct Yuan-Pound Trading From June 19, the British pound and the Chinese yuan, officially known as the renminbi (RMB), were directly swapped without using the US dollar as an intermediary. China Construction Bank (CCB), China’s second-largest lender, has been selected to become the first clearing service for renminbi trading in London. Asset managers Blackrock and HSBC were granted licences allowing them to invest in Chinese securities in local currency. The People’s Bank of China (PBoC), the country’s central bank, called it “an important move for China and Britain to jointly promote further development in their bilateral economic and trade relationship”. The pound is the fifth major currency to trade directly against the yuan in Shanghai, joining the Australian and New Zealand dollars, the Japanese yen and the U.S. dollar and beating plans by Singapore and South Korea. The yuan overtook the euro in December to become the most used currency in global trade finance after the dollar, according to HSBC Holdings Plc. It will become fully convertible in the next two to three years. The moves, which came as Chinese Premier Li Keqiang tours the U.K. this week, highlight London’s important role as China pushes to increase use of the yuan as an international currency. Speaking at an event in London on cooperation in foreign exchange markets, British finance minister George Osborne compared the growing importance of China’s currency to the emergence of the dollar as the world’s reserve currency after World War Two, saying the yuan’s growth would be one of the major changes in global finance over coming decades. “Quite bluntly, I want the City of London to facilitate that change and to be central to it,” said Osborne. China is looking to Britain’s financial sector to help promote the use of its currency in international trade. Britain is keen to fend off rivals such as Luxembourg, New York, Paris and Frankfurt, also vying for the offshore yuan business. “London is the largest offshore RMB market, so the UK should really seize on this momentum to consolidate its position as one of the most important offshore RMB markets outside Asia,” Li told policymakers and bankers at the currency-focused event. Another key milestone for London’s yuan activities, expected to be announced soon, is the setting up of branches in London by Chinese banks. In recent years, several Chinese banks have lobbied to set up branches in London, which will give them far greater lending and financing capacities compared with their current subsidiary status. Industry insiders said several Chinese banks are due to receive branch licenses soon, and this development will significantly boost the amount of yuan activities in London because branches will allow Chinese banks to better accommodate London’s growing demand for yuan trade and investment activities. 22.06.2014 | World News
Posted on: Thu, 17 Jul 2014 06:48:51 +0000
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