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) 13:28, June 23, 2014Email|
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Comments twitter facebook Sina Microblog reddit The People's Bank of China (PBOC) recently allowed direct trading between the yuan andthe British pound and authorized the China Construction Bank to be the clearing bank forRMB business in London. Following the Japanese yen, Australian dollar, New Zealanddollar and U.S. dollar, the British pound has become another currency that can directlytrade with the RMB.
RMB is popular in international market
Since China launched trials in settling cross-border trade accounts in RMB in 2009, theinternationalization of RMB has continued to accelerate.
In tandem with the China's growing economic strength, RMB is enjoying increasingpopularity in international markets. According to research on the offshore RMB marketconducted by the Bank of China (BOC), in the first quarter of this year the BOC off-shoreRMB index grew from 0.91 of the end of last year to 1.07. This represents an increase of 81percent compared with the first quarter of 2013. The scale of the offshore RMB marketcontinues to expand, and London, the world's biggest foreign exchange transaction center,has taken two thirds of the total volume of RMB foreign exchange trading outside theChinese mainland and Hong Kong.
Direct clearing can avoid currency risks
Huang Bijuan, Vice President of HSBC China, said that direct trading between the yuan andthe British pound is an important step toward the internationalization of the RMB, whichwill further promote the use of RMB in Britain.
Zeng Gang, Director of the Bank Research center of Chinese Academy of Social Science,told the media that direct clearing can lower costs and avoid various currency risks, andthe RMB can play a more important role in clearing. It will also benefit the real economy.
Financial expert Zhao Qingming points out that previously, the trading procedure betweenthe yuan and the British pound was complicated and costly, requiring the involvement ofthe U.S. dollar. Direct trading can help lower exchange costs and transaction risks, andfacilitate trade between China and Britain, in addition to reducing the reliance on the U.S.dollar and further promoting the internationalization of the RMB.
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