France And Germany Scramble For Offshore Markets To Accelerate RMB Internationalization

Recently, the Central Bank of Germany and the United Kingdom signed the Central Bank of China. RMB A memorandum of understanding on transaction clearing and settlement business. In addition, in accordance with the "Sino French relations long-term plan" signed by China and France in March 26th, the two sides agreed to continue discussions on the establishment of RMB trading clearing and settlement arrangements in Paris.

According to data from the global Interbank Financial Communication Association (SWIFT), in February, the market share of RMB as global payment currency was 1.42%, ranking eighth.

Many analysts told reporters that the Central Bank of China signed the agreement on clearing and settlement of RMB transactions with the Bank of Germany and the Bank of England, which is the infrastructure construction in the process of RMB internationalization. It can provide more convenience for the development of RMB related businesses in the offshore market and accelerate the internationalization of RMB. In addition, the development of RMB Offshore settlement center will also help RMB capital "go out" and provide better protection for RMB capital to invest overseas.

Multinational plan for RMB settlement center

With the progress of RMB internationalization and the surge of RMB trading volume, many global or regional financial centers are trying to become the offshore trading center of RMB. Among them, London and Frankfurt obviously took the lead.

On Monday (March 31st), the Central Bank of China and the United Kingdom formally signed a memorandum of understanding on RMB clearing, clearing and clearing business. Earlier, the Central Bank of Germany and China had signed similar agreements, and relevant negotiations between China and France were already in progress.

Outside it was once thought that Britain would become the first country to sign RMB clearing and settlement agreements outside Asia. In fact, London is now the largest foreign exchange trading center in the world, occupying more than 40% of the world's foreign exchange share and handling more than 60% of the RMB business besides mainland China and Hongkong.

"From a global perspective, if we only consider foreign exchange transactions, London is ranked first, then New York, Tokyo, Singapore, and then it may be Frankfurt. Liu Dongliang, senior financial analyst at China Merchants Bank's financial market department, told reporters.

"From the perspective of financial attributes, there is no doubt that London is the best choice for offshore RMB settlement centers, but if political, economic and other factors are taken into account, Germany Frankfurt is probably the best choice. Deng Haiqing, director of fixed income research at CITIC Securities, told reporters that from an economic perspective, Germany is the core and engine of the EU economy and the healthiest economy. As a clearing center for RMB transactions, it can provide a more secure and reliable partner for the renminbi to go out.

Deng Haiqing said that Germany has been relatively low-key in the international political arena. Unlike Britain and France, the economic and financial relations between China and Germany are rarely affected by political factors. In addition, Frankfurt itself is the largest financial center in Europe except London, and is fully equipped to become the basic condition for RMB Offshore settlement center.

RMB internationalization step by step

Zhao Qingming, an international financial expert, told reporters that the signing of the above settlement and settlement agreement for RMB transactions is the infrastructure construction in the process of RMB internationalization. It can provide more convenience for the development of RMB related businesses in offshore markets and accelerate the internationalization of RMB. However, the internationalization of RMB and the expansion of RMB settlement will depend fundamentally on the acceptability of the market. Considering that the cross-border use of RMB is not too large, the effect of such an agreement on the internationalization of RMB can be more "icing on the cake".

Liu Dongliang believes that, first of all, this shows that the status of RMB in the international market is getting higher and higher. Secondly, it should be an important manifestation of the central bank's initiative in promoting the internationalization of RMB.

Liu Dongliang also said that signing relevant agreements with the Central Bank of Germany, Britain and other countries also indicated that Chinese officials attach great importance to promoting the internationalization of the RMB, and are advancing step by step in the system. With the demonstration effect of the three big economies, the following similar agreements may blossom everywhere in some small and medium-sized economies.

It is worth noting that the International Monetary Research Institute of Renmin University of China released the Research Report on the dynamics and outlook of RMB internationalization in March 31st. It is expected that by the end of 2014, the RMB internationalization index RII is expected to continue to climb to 1.88, and the internationalization level of RMB will surpass the Japanese dollar and the pound in 2~3.

"The agreement signed with Germany and Britain is not the latest thing in fact. "Deng Haiqing said that since it was the first official signing of the RMB clearing and settlement agreement with the important developed economies in Europe, it is more representative, which is related to domestic economic reform. Finance Market reform is a synchronous move.