The People’s Bank of China (PBOC) has agreed a memorandum of understanding with the UK’s Bank of England. The agreement will set out cooperation between the two central banks on renminbi clearing and settlement in London.
The British Government said that the UK had been the first G7 country to agree a RMB swap line with the PBOC, and this is the first agreement of its type executed by the Chinese central bank outside Asia for clearing and settlement arrangements.
The British Chancellor said that a future London clearing bank would complement the main clearing and settlement infrastructure in Hong Kong in assisting with the transfer of funds. (By way of comparison, in Singapore in September 2013, the PBOC arranged for the Industrial and Commercial Bank of China to act as renminbi clearer).
The announcement from the UK also stated that according to SWIFT data, 62 per cent of renminbi payments outside of China now take place in London, and London asset managers are the only ones in the West able to invest directly in Chinese stocks and shares in renminbi.