UK, China central banks push ahead with renminbi/sterling agreement

People’s Bank of China and the Bank of England have agreed today to facilitate discussions on the establishment of a reciprocal three-year renminbi/sterling currency swap arrangement.

The arrangement would be used to finance trade and direct investment between the UK and China and to support domestic financial stability should market conditions warrant. Central banks’ governors have agreed that their central banks would work together to sign the final agreement shortly.

The UK chancellor George Osborne said: “This agreement between the Bank of England and the People’s Bank of China is an important step that cements London as the Western hub for the fast-growing renminbi market. It is another sign that in the global race, Britain is seen as open for business by emerging and established markets alike. We have already seen evidence in 2013 of a significant increase in renminbi trade in London, and today’s announcement supports Britain’s ambition to build a thriving renminbi market in London.”

Roger Gifford, lord mayor of the City of London added: “The agreement of a swap line between the Bank of England and the People’s Bank of China is a very positive signal about the importance of the internationalisation of the RMB to London. It will give greater confidence to market participants, and bolster the already strong growth of London’s RMB business volumes.”

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