A worker counts Chinese currency Renminbi (RMB) at a bank in Lianyungang, east China's Jiangsu Province, Aug. 11, 2015.(Xinhua/Si Wei)
The People's Bank of China (PBoC) is soon to launch short-term bonds for the first time abroad in London.
The European offshore renminbi (RMB) market has hit a boom in recent years and the UK, a traditional financial stronghold, has taken the lead in Europe in the process of internationalizing the RMB.
RMB INCREASINGLY VISIBLE IN EUROPE
Since introducing a test of cross-border trade in 2009, the Chinese currency has become more and more visible to companies and financial organizations in Europe.
"In 2010, when we began to provide RMB financial products in France, some customers asked me questions like what is the difference between the RMB and the yuan," recalled Pan Nuo, general director of the French branch of Bank of China, in a recent interview with Xinhua. "But today, it would be incredible if someone still poses such a question," he said.
According to statistics from Swift, a global platform for financial trading, Europe represented 10 percent of the value of transactions in RMB in the world between July 2013 and July 2014 (except Chinese mainland and Hong Kong), four European countries moving up in the Top 10.
The growth of these RMB transactions is impressive in Europe. According to Swift, between July 2013 and July 2014, the RMB European hubs such as Britain, France, Germany and Luxembourg grew respectively by 123.6 percent, 43.5 percent, 116 percent and 41.9 percent.
In 2014, the amount of RMB transactions processed by the French branch of the BoC reached about 177 billion yuan (28 billion U.S. dollars), while the amount of clearing (compensation) reached one billion yuan according to Pan.
THE UNITED KINGDOM HAS LITTLE HEADWAY COMPARED TO ITS COMPETITORS
As a giant of the financial center of Europe, the United Kingdom took some advantage over its European competitors such as Germany and France in the use of the RMB, although the two others are not far behind.
Here are several notable facts: according to Swift statistics, 26 percent of payments in RMB offshore, with the exception of Chinese mainland and Hong Kong, were made early in 2014 in the UK. In 2013, 60 percent of trade in RMB in exchange took place in London.
The UK is also the first Western country to have issued sovereign bonds in RMB and the first G7 country to have signed a swap agreement in RMB. As well, the British pound can also be directly converted into RMB, while the stock exchanges in London and Shanghai are thinking about becoming closer.
Certainly, it should be noted that Germany and France, two other major financial hubs in Europe, also realized their own success. For example, Germany is the first European country to sign a Memorandum of Understanding to launch a RMB payment clearing center in Frankfurt, though only three days earlier than the UK.
In France, more than a quarter of French companies have used RMB in at least one cross-border commercial transaction, which is the highest level for a European nation, according to a study published in 2014 by the British bank HSBC.