UK Signs Deal To Turn London Into Major Offshore Yuan Centre

The city of London could soon be flooded with billions of dollars worth of Chinese money, said a report by Reuters on Sunday, after UK finance minister George Osborne announced a landmark deal that sees London teaming up with Hong Kong to develop a offshore trading centre for the Renminbi.

The city of London could soon be flooded with billions of dollars worth of Chinese money, said a report by Reuters on Sunday, after UK finance minister George Osborne announced a landmark deal that sees London teaming up with Hong Kong to develop a offshore trading centre for the Renminbi.

The announcement by Osborne, alongside Hong Kong Monetary Authority chief Norman Chan, will see the formation of a London-Hong Kong Forum, which aims to look into clearing and settlement systems, market liquidity and development of new renminbi denominated products.

Hong Kong, which to date is the only officially designated offshore trading centre for the yuan, will also assist the UK in becoming a significant offshore renminbi trading centre, while maintaining its status as the main gateway to the onshore currency market in mainland China.

[quote]”London and Hong Kong are uniquely placed to assist in the development of this exciting market and, further to last summer’s agreement, I am delighted that the financial services industries in both financial centres are working together to achieve this goal,” said Osborne in a statement at the Asia Financial Forum, as cited by the Wall Street Journal.[/quote]

“I believe that we can make Britain the home of Asian investment and Asian finance in Europe,” added Osborne, who is presently visiting Hong Kong, Beijing and Tokyo in order to strengthen the UK’s business ties.

If the deal goes through, the UK will be “the only European country to hold a dialogue at such a senior level with the Chinese government,” claimed a Treasury official to the Financial Times; and will allow London compete with other financial centres, including Singapore and Taipei, for a share of the growing offshore Yuan business.

The UK was also given a major boost after The Hong Kong Monetary Authority recently announced its decision to extend operating hours of its Renminbi payments system by five hours in order to better accommodate European transactions, particularly those in London.

London has “a unique opportunity that should not be missed”, said Standard Chartered’s Chief Executive Peter Sands in an interview with the Financial Times.

Stuart Gulliver, HSBC’s chief executive added that, “successful co-operation will support British businesses as they look east to the opportunities in Asia while supporting Asian businesses looking west to Britain as a natural home for trade and investment.”