Britain said yesterday it will partner with Hong Kong to develop the City of London as a major offshore center of trade in China’s yuan currency.
British Chancellor of the Exchequer George Osborne said Britain and Hong Kong had agreed to launch a joint private sector forum to enhance cooperation and support China’s efforts to develop the offshore market for the yuan (renminbi/RMB).
Osborne told a meeting of Asian finance officials and executives in Hong Kong the intention was to “establish London as a new hub” for the yuan.
“It’s clear that there is scope for the substantial expansion of the RMB market in the coming years,” he told the Asian Financial Forum.
“I think London is perfectly placed to act as a gateway for Asian investment and banking to Europe and as a bridge to the United States,” he said.
Hong Kong is currently the only officially designated offshore yuan trading center, and is keen to expand the currency’s use in international transactions as an alternative to the greenback and the euro.
China and Britain agreed in September to work towards the development of an offshore yuan market in London, the heart of European banking.
Osborne said establishing London as an offshore center for yuan-denominated settlements, in partnership with Hong Kong, would benefit China’s economic development as well as Britain’s.
The rapid growth of China’s economy provided opportunities that Europe needed to seize as it struggled to emerge from the eurozone sovereign debt crisis.
Exports of goods from Britain to China leaped 20 percent in 2010, a measure of the importance of Asia to Britain’s long-term economic growth, Osborne said.
“A richer, stronger Asia is an opportunity for the world, not a threat,” said Osborne, who is visiting Hong Kong, Beijing and Tokyo to strengthen business ties, especially in financial services, infrastructure and innovation.
He welcomed a recent decision of the Hong Kong Monetary Authority to extend the operating hours of its yuan payments systems to accommodate European transactions, particularly yuan trades in London.
The new London-Hong Kong Forum will examine other ways London and Hong Kong can streamline clearing and settlement systems, boost market liquidity and develop new yuan-denominated products.
It will initially be comprised of leading bankers from both centers, including HSBC Holdings, -Standard Chartered, Barclays and Bank of China. Hong Kong Chief Executive Donald Tsang (曾蔭權) said the forum would meet twice a year, starting in Hong Kong in May.
“Banks and financial -institutions in London are most welcome to make good use of Hong Kong’s offshore RMB platform,” he said.
“The forum will focus on exploring ways to enhance linkages between Hong Kong and London,” he said.