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UK and China sign three year currency swap to make business in Yuan

Monday, June 24th 2013 - 08:17 UTC
Full article 6 comments
Sir Mervyn King announced the deal. UK banks hold 35bn Yuan in deposits Sir Mervyn King announced the deal. UK banks hold 35bn Yuan in deposits

The Bank of England and its Chinese counterpart have signed a deal likely to boost trade between the UK and China in the Yuan. The BoE and the People’s bank of China have signed a three year currency swap arrangement worth 200bn Yuan (33bn dollars), the UK central bank confirmed.

The UK is looking to become a centre for the Chinese currency, also known as the Renminbi. British banks hold 35bn Yuan worth of deposits in the Chinese currency.

Currency-swap agreements allow central banks to swap currencies and can be used by firms to settle trade in local currencies rather than in US dollars, as happens now, since China's currency is not fully convertible to other currencies.

The prospective deal was first announced in February by BoE Governor Sir Mervyn King.

“In the unlikely event that a generalised shortage of offshore Renminbi liquidity emerges, the Bank will have the capability to facilitate Renminbi liquidity to eligible institutions in the UK,” Sir Mervyn said on Saturday.

Last year, the UK Treasury announced plans to make London - the world's largest currency trading hub - the leading international centre for trading the Yuan outside mainland China and Hong Kong.

China has been gradually relaxing strict controls on the value of its currency and on flows of capital. Beijing has been using these pacts as part of its push for a more global role for the Yuan.

It has a swap agreement with Brazil worth 30bn dollars and has also signed similar agreements with other trading partners such as Japan, Australia and Hong Kong.

Categories: Economy, International.

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  • Brit Bob

    Just wondering, did the Chinese mention the 'Malvinas' before they signed the deal? LOL Hector Simple man & Co.

    Jun 24th, 2013 - 10:29 am 0
  • screenname

    @1 Brit Bob

    Or Tiawan, or old Hong Kong flags with a union flag on them being displayed in Hong Kong?

    I wonder if Think of one of his puppets will put a post up about how we are trading with nations with dubious morals?

    Jun 24th, 2013 - 01:04 pm 0
  • yankeeboy

    The Chinese economy looks to be on the brink of some terrible calamity. Since the gov't owns the banks they'll survive, maybe, but it looks to be in really bad shape.
    A slowing economy and mass personal bankruptcies may be just the ticket to some exciting civil unrest going in the cities.
    There are a lot of families that have 3 generations of wealth tied up in worthless property.
    These are the same people that are driving the spending and keeping the cities stable.
    Tick tock...the pot is starting to boil

    Jun 24th, 2013 - 03:40 pm 0
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