China, Britain strengthen cooperation to push yuans global use

edward222 · Oct 23, 2015

Credit to: Tax Avoidance News : China, Britain strengthen cooperation to push yuans global use

BEIJING With steady steps, China has been pushing its currency to wider use on the global stage, and it has taken a big stride forward with President Xi Jinpings state visit to Britain.

On Wednesday, Chinas central bank announced it has issued 5 billion yuan-denominated notes in London, in the first offshore issuance of such debts outside China.

The interest rate of the one-year notes was set at 3.1 percent.

The move is an important part of the yuans globalization strategy to increase its presence in the global bond market, said Sang Baichuan, director of the Institute of International Business at the University of International Business and Economics.

Since July 2009, when China introduced a pilot scheme allowing for yuan settlements in cross-border trade, the currencys overseas footprints have been expanding fast, especially for use in international trade.
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ooohhh yuan..

waltky · Sep 27, 2016

China wants yuan to dominate global currency...

US Clearing Center Is China's Latest Move to Make Yuan Global Currency
September 23, 2016 - China this week established the first clearing center for the Chinese yuan, or RMB, in the United States. The move is seen by some as a signal China wants to take on the dollar on its home turf.

But there is more than a sense of bravado behind the decision. This is a crucial time for the RMB, which is struggling to stay on course while preparing to enter the coveted currency basket of International Monetary Fund's Special Drawing Rights (SDR) on October 1. In financial terms, there was no reason to establish an RMB clearing center as the U.S. market can easily be serviced through dedicated RMB centers in other parts of the world. "But it sends the signal that China wishes to enter the U.S. financial markets with RMB business to challenge the U.S. dollar on its home turf, so to speak," Jacob Kirkegaard, a senior fellow at the Washington-based Peterson Institute of International Economics told VOA. "As such, this is more a political signal than a financial necessity," he said. "This is because the RMB rate is an intensely political figure and essentially can be taken as a proxy for 'faith in the Chinese economy.' "

No celebrations

Chinese officials have undergone years of toil and entered into more than 20 currency swap agreements to give the RMB a global image. But they are not going to sip wine and declare "gan bei" (bottoms up, in Chinese custom) over the yuan's entry into the IMF's basket for SDR a few days later. Christopher Balding, associate professor at HSBC School of Business Peking University, said China is desperately trying to keep the RMB from crashing by spending $50 billion a month. Beijing is selling dollars out of its reserves to buy up the available yuan in the international market, he said. "If they [Chinese officials] went on national TV and announced that they would let the market fully determine the value of the RMB, I don't think it is a stretch to say that the RMB will drop 15-20 percent in the blink of an eye," Balding told VOA. "China's foreign investment is down 40 percent. When you couple that with the continued amount of money leaving China, that is putting a lot of pressure on the RMB," he said. Beijing is actually de-internationalizing its currency by sucking out the available yuan in the world markets."If they [Chinese currency] are declining at the rate they are now, there will be no RMB available outside China in 18 months," he said.

Battle for stability

China's recent policy to keep the currencys value roughly stable has been driven by its desire to avoid sharp currency moves in the lead-up to the G-20 summit that took place in China recently, and, now, the forthcoming inclusion of the RMB in the IMFs SDR basket, according to Eswar Prasad, senior professor at Cornell University and author of an upcoming book, Gaining Currency: The Rise of the Renminbi. "Chinas government faces a conundrum that other reserve currency economies have faced in the past - how to promote the currencys role in global finance without losing control over the currencys value," Prasad said, adding, "Currency management policies over the last year suggest that the government sees stability in currency markets as a higher priority than promoting the currencys international role."

An exchange store staff shows a Chinese RMB$100 banknote (L) and a US$100 banknote in Hong Kong

China's currency moves are not meant to protect or push forward its exports. Chinese exporters are not likely to gain hugely by a slide in RMB value or lose much if it was a little stronger, because many of them face little competition in the price and quality range in which they operate, experts said. "China is most interested in maintaining basic stability of its currency and limiting volatility. Reducing expectations of substantial or sudden depreciation helps reduce capital outflows," said Scot Kennedy, deputy director of the Freeman Chair in China Studies at the Center for Strategic and International Studies. "The recent modest depreciation is not geared to support exports."

http://www.voanews.com/a/china-rmb-comes-to-new-york-before-imf-special-basket/3522040.html
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GrayMatter · Sep 27, 2016

not sure how selling bonds helps circulate currency.

britons buy w/ pounds.

when they redeem, its for pounds.

where does the yuan come into play in terms of being used as a trading currency from this move?

if they wanted to increase use of yaun, i think better strategy would be to stop printing the yaun so its buying power held. foreigners would recognize its soundness and that combined with their organic economic growth would increase demand for the yuan and therefore prevalency...

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