China and Great Britain have finalised a RMB 200 million swap line which will allow the UK’s Bank of England to tackle temporary shortages of renminbi liquidity. This new arrangement will last for three years.
This deal will allow firms a sounder platform on which to settle obligations within UK/China trade in Chinese currency, in preference to the more commonly-used US dollars.
Since the overall size of renminbi-denominated bank deposits in UK banks is only RMB 35 billion, the existence of this new currency swap arrangement will allow Chinese currency to be tapped on a more reliable basis.
The deal follows two years of discussions initiated by a decision to allow London to become an offshore centre for renminbi trading. The UK now joins a group of two dozen countries that operate bilateral currency swap deals with the People’s Bank of China.
Britain’s slice of RMB 200 million is on a par with similar facilities granted to Brazil and Australia, but pales next to that allocated to Hong Kong, a much bigger RMB trading centre, and has a currency swap line double the size of Britain’s facility.
China and Great Britain have finalised a RMB 200 million swap line which will allow the UK’s Bank of England to tackle temporary shortages of renminbi liquidity. This new arrangement will last for three years.
This deal will allow firms a sounder platform on which to settle obligations within UK/China trade in Chinese currency, in preference to the more commonly-used US dollars.
Since the overall size of renminbi-denominated bank deposits in UK banks is only RMB 35 billion, the existence of this new currency swap arrangement will allow Chinese currency to be tapped on a more reliable basis.
The deal follows two years of discussions initiated by a decision to allow London to become an offshore centre for renminbi trading. The UK now joins a group of two dozen countries that operate bilateral currency swap deals with the People’s Bank of China.
Britain’s slice of RMB 200 million is on a par with similar facilities granted to Brazil and Australia, but pales next to that allocated to Hong Kong, a much bigger RMB trading centre, and has a currency swap line double the size of Britain’s facility.