The City of London Corporation’s policy chairman on the opportunities offered by London becoming a renminbi trading centre
With less than one hundred days to go until the Olympics, London is edging ever closer to Beijing, and in more ways than one.
Last Wednesday, the City of London initiative to establish London as a centre for renminbi business was launched by the Chancellor of the Exchequer.
These are exciting times for the UK and China, and what better a way to pass on the Olympic torch than for us to work together to internationalise the RMB?
London flourishes as a result of its strong partnerships with other international centres, and its world-class offer of international products and services.
Forging and strengthening links with overseas markets to facilitate trade and investment is thus an essential part of the City of London’s work.
The year of the dragon, embodying the rise and rise of China – and an increasing international use of its currency – presents London with its most exciting business opportunity for decades.
For a long time, China has been an integral part of the City of London’s international engagement.
With the help of our offices in Shanghai and Beijing, we are able not only to keep our finger on the pulse in China, but also to develop contacts with Chinese decision-makers and firms, facilitating their access to City services.
Cementing these partnerships will enable us to better support an increased international use of the renminbi, and will reap benefits for both parties for years to come.
The fruits of our combined efforts will not only benefit the UK and China, but will resonate positively throughout Europe, boosting jobs and growth throughout the region.
The breadth and depth of financial and professional services in the UK, coupled with our timezone and internationally-spoken language, make London the obvious candidate to develop the RMB market in the West.
The City is home to numerous foreign-owned institutions: sovereign wealth funds, banks, insurance companies and professional services; many of which already play an active role in the Hong Kong market – pushing impressive growth of the offshore (CNH) market.
It is no surprise therefore that London’s international institutions have united in this way – working together with HM Government in order to develop London as a Western hub for renminbi business.
In order to grow this market, the City of London initiative is focussing on a few key objectives:
• developing a more liquid global RMB (CNH) market, including developing liquidity in London;
• identifying ways to enhance the Hong Kong clearing & settlement infrastructure – to accommodate more London business;
• further developing London’s products and services offering;
• educating and marketing London’s RMB products – to increase the awareness amongst corporates; and
• seeking to understand the needs of the users of offshore RMB products and services.
Developing London as a Western hub for the RMB market will require patience and a creative approach, and we are under no illusions that this will be an easy process. The initial stages of development may be gradual, but we believe that this acorn will grow into a very big Oak tree in the years ahead.
Stuart Fraser is policy chairman at the City of London Corporation.
Join us on LinkedIn for the latest business debate and discussion