The UK Chancellor of the Exchequer joined leading City institutions today (18 April) at the Gherkin, 30 St Mary Axe, to launch a new initiative designed to strengthen London’s position as the leading western hub for international renminbi (RMB) business – and boost the RMB’s wider international use for trade and investment.
The City of London initiative on London as a centre for renminbi business will help deliver a private and public sector strategy for London to become a centre for RMB products and services, complementing Hong Kong and other financial centres. A new report published by the initiative today quantifies the already significant renminbi business being done in London.
The initiative is facilitated by the City of London Corporation. The current members are Bank of China, Barclays, Deutsche Bank, HSBC and Standard Chartered, with observers from HM Treasury, the Bank of England, and the Financial Services Authority. The initiative seeks to provide leadership to the wider financial markets on technical, infrastructure and regulatory issues relating to the RMB product market in London.
It also advises HM Treasury on maximising London’s capacity to trade, clear and settle RMB and articulates practical next steps and long-term aims for the further development of the RMB market in London. Additionally, the group advises HM Treasury and other UK authorities on any financial stability concerns members may perceive.
George Osborne, Chancellor of the Exchequer, said:
“I welcome this initiative, which will further strengthen London’s development as the leading Western Hub for the international Renminbi market. As the world’s leading financial centre, London is uniquely well placed to assist China in its goal of further expanding the international use of the RMB.”
Stuart Fraser, Chairman of the initiative’s Steering Committee and Policy Chairman at the City of London Corporation, said:
“As the world’s leading global financial centre, London is perfectly positioned to act as the western hub for RMB as exchange controls are gradually relaxed. London has many natural advantages, including: time-zone, a trusted legal system, a respected regulatory framework, deep pools of liquidity and a strong track record of innovation. We are also home to global institutions that have expertise in utilising RMB-denominated products and services to benefit clients by facilitating trade with China. This will increase exports and help deliver jobs and growth in the UK and Europe.”
The report published today by the initiative presents a picture of the renminbi products and services offered by London institutions and the volume of business traded in London in 2011. London: a centre for renminbi business, commissioned by the City of London Corporation and authored by Bourse Consult, demonstrates that a significant amount of renminbi business is already being done in London, including services for retail clients, services for corporate clients and interbank and institutional business. These products and services benefit clients by enabling them to conduct international transactions cost- effectively and securely and allow risk to be hedged and managed.
The total amount of London customer and interbank RMB deposits revealed in the survey is in excess of ¥109 billion. Customer deposits – deposits in accounts for personal, corporate and institutional customers – amount to ¥35 billion (compared with a total customer deposits volume in Hong Kong in December 2011 of ¥589 billion). This indicates that a pool of RMB liquidity is being established which will be valuable in developing the potential of London as a centre for RMB business, not only in forex but also in investment products and other instruments.
Click here to download a copy of the report.