China’s renminbi is becoming an integral part of capital markets in the UK and Europe, and will only deepen its presence through further international reach. That is the message from Mark Boleat, policy chair at the City of London Corporation.
In a 26 April seminar held by prominent renminbi stakeholders – including the Bank of China and the International Capital Market Association – Boleat hailed the overseas market that has grown up around the currency.
“The European offshore renminbi market is an excellent source of capital and talent,” he said. “It confirms the significance of Europe as a committed partner of China’s in driving forward the overall internationalisation of the currency.
“Though big-bang announcements are exciting and harness support, it is the gradual and flexible approach that will ensure the sustainable success of the offshore market in Europe.”
Boleat assured the seminar’s attendees that the City of London is continuing to apply a holistic approach to the renminbi as it becomes more of a global force, assessing and reassessing the market’s effects on the other parts of the financial system.
Indeed, he stressed, such activities in relation to the renminbi are on the Corporation’s radar more than ever.
He added: “We must remember that this process is intrinsically linked with wider financial and economic reform in China. It is this broader reform that affects the changing nature of trade and investment – which underpins the UK-China financial relationship.
“This is why the City of London and its industry partners are not only focusing on developments within the offshore market, but also those in China. The gradual opening of the interbank market is an obvious example.”
At the conclusion of his speech, Boleat predicted that increased interoperability and regulatory harmonisation across both Europe and China would, in time, result in full integration of the renminbi into the global financial system.
Boleat – who spearheads the Corporation’s ongoing policy work on China – is set to visit Shanghai in June. There, he will further engage with Chinese stakeholders on reforms to the financial sector and identifying opportunities for collaboration with UK financial services experts.
His speech was timely: just two days after he delivered it, the latest renminbi tracker update from global payments operator SWIFT revealed that the UK had overtaken Singapore as the second-largest offshore renminbi clearing centre.
Data from the tracker showed that 40% of transactions made between the UK and China/Hong Kong are made in renminbi.
Stephen Gilderdale – SWIFT MD for the UK, Ireland and Nordics – said: “Since the China Construction Bank (London branch) became a clearing bank in the UK in June 2014, there has been a steady growth of renminbi payments between the UK and China/Hong Kong.”
He added: “Offshore renminbi clearing centres are driving greater use of the currency in global trade, and countries suc