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London Wants to Become the Center of Chinese Currency Trading
Greetings,
London Wants to Become the Center of Chinese Currency Trading
PBOC official said to view London as likely renminbi hub
Euronext study expects $5 trillion of Chinese investment
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Three years ago, Chinese officials said U.K. Prime Minister David Cameron had “seriously damaged” relations by meeting with the Dalai Lama, the exiled Tibetan leader. As planned talks between the two countries were canceled or failed to take place, worries emerged that Britain would miss out on building deeper economic ties.
The People’s Currency
That doesn’t seem to be a problem anymore. As the U.K. capital hosts Chinese President Xi Jinping this week, a ranking People’s Bank of China official told a British executive that the central bank already expects London to be the worldwide center for renminbi trading. The London executive asked not to be named, citing confidentiality.
U.K. executives care about relations with China because its economy is widely expected to regain its 19th century role as the world’s largest. And while its currency wasn’t even allowed outside its own borders before 2004, China is opening up now, spurring predictions that the renminbi will become a reserve currency eventually rivaling the dollar. London already has 40 percent of global foreign-exchange trading and wants to build on its dominant position by grabbing a major share of offshore renminbi trading.
“We’re seeing the internationalization of the renminbi growing at a pretty brisk pace here,” said Standard Chartered Europe Chief Executive Officer Richard Holmes. “There’s a lot of runway. There’s a lot further to go. And that’s due to what I view as the end of U.S. dominance.”
London’s prowess in foreign-exchange trading has been a frequent theme in the past week as bankers and politicians cite a statistic from TheCityUK, a financial services lobby group: London trades more dollars than New York, and more euros than all of Europe combined.
Jobs, Investment
For the U.K. capital, increasing its renminbi trading could mean more financial services jobs and more investment. More than $50 billion of Chinese cash has gone into British assets in the past 15 years, according to Standard Chartered estimates. The two countries agreed on 14 billion pounds ($22 billion) of trade deals during Chinese Premier Li Keqiang’s visit last year.
“The big story for the next 15 years is China’s integration with global financial markets,” said David Loevinger, a former China specialist for the U.S. Treasury and now managing director at TCW Group Inc., which oversees about $180 billion. “Leaders of other countries know their prosperity depends on how they structure their relationship with China.”…..More Here
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