Offshore renminbi markets spring up worldwide
The development of free trade zones and the rise of the new offshore market for the renminbi, will continue to ensure that offshore renminbi-denominated capital grows at a relatively fast pace.
Standard Chartered Bank has projected that the total renminbi-denominated capital will grow by at least 40% to 2.5 trillion yuan (US$403 billion) by the end of 2014.
In 2013, offshore renminbi-denominated assets, including deposits, bonds and loans, nearly doubled. Major offshore centers for the renminbi, such as Hong Kong, Singapore, Taiwan and London reported a combined 1.2 trillion yuan (US$193 billion) in renminbi-denominated deposits.
A growing number of offshore centers for the renminbi have opened globally due to rising global demand and the implementation of favorable policies.
The signing of foreign-exchange agreements with other countries has also benefited the development of offshore centers for the renminbi.
At present, the People’s Bank of China, the country’s central bank, has signed currency swap agreements with 20 economies, including Hong Kong for 400 billion yuan (US$64 billion), Singapore for 150 billion yuan (US$24 billion) and the United Kingdom for 200 billion yuan (US$32 billion).
Ceajer Ka-keung Chan, the secretary for financial services and the treasury in Hong Kong, stated that the renminbi’s offshore business has to be diversified so that it can become an international currency.
Among the offshore centers for the renminbi, Hong Kong has the largest capital. Official data on Hong Kong showed that renminbi-denominated deposits at local banks touched 920.4 billion yuan (US$148.4 billion) in February this year, up by 3% from a year ago.
Since renminbi-denominated transactions have been allowed in Taiwan since February last year, Taiwan had accumulated renminbi-denominated deposits worth 247.1 billion yuan (US$39.8 billion) in domestic banking units and offshore banking units, a record high, according to Taiwanese regulators’ statistics released on March 14.
In Asia, Singapore is also a strong competitor as its renminbi-denominated deposits exceeded 100 billion yuan (US$16.1 billion) last year.
China’s central bank also signed a currency swap agreement for 350 billion yuan (US$56.4 billion), or €45 billion (US$62.1 billion), with the European Central Bank in October last year.
China has also signed memorandum of understanding on the renminbi’s settlement and clearing with Frankfurt and London.
However, renminbi-denominated transactions remain limited in the United States, compared with other offshore renminbi centers, and their volume is still relatively small in comparison with other foreign currencies in the United States.
Credit: Want China Times