UPDATE 2- Swiss SNB says inks pact for renminbi clearing with PBOC
* PBOC extends $8 bln in pilot scheme for Swiss investors
* Sydney, London, Frankfurt among global yuan trading centers
* Swiss bankers welcome the move to tap China growth
DAVOS/ZURICH, Jan 21 (Reuters) – Switzerland’s central bank said on Wednesday it had agreed with the People’s Bank of China (PBOC) to establish clearing arrangements in Switzerland for renminbi trading and extend a pilot scheme for clients of Swiss banks.
“It (the arrangement) will promote the use of the renminbi by enterprises and financial institutions in cross-border transactions, and promote facilitation of bilateral trade and investment,” the Swiss National Bank said in a statement.
Alongside the pact, the PBOC will extend a pilot scheme for foreign investors to clients of Swiss banks, with a quota of up to 50 billion yuan ($8 billion).
“We are willing to make Switzerland one of the centres of offshore RMB business,” Chinese Premier Li Keqiang told the World Economic Forum.
He said China was committed to opening up more to the outside world, and planned to deepen reforms of financial services and foreign exchange.
Until recently, transactions in China’s currency, the renminbi or yuan, have been impractical for all but very large European companies that are able to involve China’s central bank in a deal, because the renminbi is not freely convertible.
China’s central bank has already chosen Sydney, Seoul, Paris, Luxembourg, London, Frankfurt, Singapore and Hong Kong as global centres for trading the yuan, or renminbi, as part of efforts to promote the use of its currency in international trade.
In the past five years, China has promoted use of the yuan for trade and investment, and also as a reserve currency to help lower currency risks for Chinese companies and challenge the dollar’s global dominance over the long term.
The Swiss central bank said a bilateral currency swap agreement worth 150 billion yuan signed with China last year was a key precursor to developing a renminbi market in Switzerland.
Switzerland’s banking lobby welcomed the move, saying it bolstered Swiss efforts to participate in Chinese growth. ($1 = 6.2112 Chinese yuan renminbi) (Reporting by Alexander Smith in Davos and Katharina Bart in Zurich; Editing by Kevin Liffey)
