London could be in line to become an offshore
trading centre for the Chinese renminbi (RMB), media reports
suggest.

The UK Chancellor of the Exchequer George
Osborne and Chinese vice-premier minister Wang Qishan are expected
to discuss the growth of RMB trading in London at a meeting in the
UK’s capital, according to the Financial Times.

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Treasury officials are yet to respond to
PBI’s enquiry for more information on discussions.

 

Big boost for UK industry

The ability to trade RMB would be a major coup
for London as a financial centre as it would give private banks and
wealth managers the ability to invest in the rapidly appreciating
Chinese currency on behalf of their clients without needing a
physical base in Asia.

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Many private banks, including Barclays Wealth,
DBS, HSBC Private Bank, OCBC, are already offering RMB products and
services.

Currently, Hong Kong is the only RMB licensed
offshore trading centre.

According to the latest Hong Kong Monetary
Authority monthly statistical data, RMB deposits in Hong Kong
climbed by 3.4% to RMB572.2bn ($70bn) at the end of July.

 

London to beat out
Singapore?

In June, China’s CITIC Bank predicted
Singapore was poised to become the second offshore RMB centre after
Hong Kong.

CITIC’s China Banking Group chief
economist/strategist Liao Qun said the second phase of RMB
internationalisation, following Hong Kong and Macau, was likely to
happen in the Association of Southeast Asian Nations region.

Meanwhile, the Securities and Futures
Commission (SFC), Hong Kong’s securities regulator, said it is
ready to authorise retail fund products managed by holders of
Renminbi Qualified Foreign Institutional Investors (RQFII)
quotas.

New foreign direct investment measures are in
place permitting RMB raised or borrowed in Hong Kong to flow into
the Mainland for direct investment.

The RQFII quota has been set at RMB20bn.