RegionsChinaBoE Plans to Sign Currency Swap Deal with China

BoE Plans to Sign Currency Swap Deal with China

The Bank of England (BoE) and the People’s Bank of China (PBoC) plan to sign a deal on a three-year renminbi (RMB) – sterling currency swap agreement to encourage trade and investment between the UK and China.

The BoE’s outgoing governor, Mervyn King, met the PboC’s governor, Zhou Xiaochuan, on a trip to China late last week, at which they agreed to try to sign a swap agreement soon to strengthen the UK’s efforts to establish itself as a leading offshore hub for RMB trading.

A statement issued by the BoE said that: “The arrangement would be used to finance trade and direct investment between the two countries and to support domestic financial stability should market conditions warrant.” China already has currency swap arrangements with a number of countries, including Australia, Malaysia and South Korea.

“London is growing rapidly as a centre for RMB business,” King added and the establishment of a sterling-RMB swap line would support UK domestic financial stability.

He added that he swap would mean that if there were a shortage of RMB outside China, the BoE would be able to provide liquidity to UK banks.

According to the UK chancellor, George Osborne, the agreement “cements London as the western hub for the fast-growing RMB market”.

“It is another sign that, in the global race, Britain is seen as open for business by emerging and established markets alike,” he added. “We have already seen evidence in 2013 of a significant increase in RMB trade in London.”

Related Articles

China after the national congress – the outlook for the RMB

Capital Markets China after the national congress – the outlook for the RMB

8m Richard Hartung
China’s ‘unsustainable’ debt crisis is an investor's gold mine

China China’s ‘unsustainable’ debt crisis is an investor's gold mine

10m Victoria Beckett
Financial regulators crack down on individual misconduct

China Financial regulators crack down on individual misconduct

11m Graham Buck
China’s sovereign credit rating downgraded by Moody’s

China China’s sovereign credit rating downgraded by Moody’s

1y Graham Buck
De-risking and the decline in correspondent banking

Asia Pacific De-risking and the decline in correspondent banking

1y Henry Balani
London keeps top ranking for offshore RMB FX transactions

Banking London keeps top ranking for offshore RMB FX transactions

1y Graham Buck
IMF upbeat on global financial stability

China IMF upbeat on global financial stability

1y Graham Buck
Drought stress testing tool launched for banks

Banking Drought stress testing tool launched for banks

1y Graham Buck