Vancouver makes push for currency trade center
Seeking to capitalize on Vancouver’s thriving Asian community, British Columbia Premier Christy Clark suggested recently that the city would be an ideal setting to serve as the first North American offshore clearing and settlement center for the Chinese renminibi.
“There will be a lot of service-sector jobs that will come with this center. Plus the center will encourage a lot of Chinese banks to establish to headquarters here and that will bring even more jobs,” Clark said on July 14 after meeting with an Asian trade delegation.
“I think Vancouver has a lot of advantages. We have a huge Asian community that includes many who have Cantonese and Mandarin language skills. Plus I think this would help establish Vancouver and British Columbia as a gateway for international and Asian finance,” she added.
Clark said her office is “actively lobbying” the Bank of Canada and the People’s Bank of China — the two nations’ central banks — along with Ottawa and Beijing on the settlement center. She hopes that a decision on the center from all of the parties will come within a year.
Vancouver will face competition from Toronto, which also has a sizable Asian population, to become a primary trading center for the RMB. Toronto is touting its status as the financial center of Canada.
Meanwhile, Vancouver has implemented a program that exempts foreign-exchange trading from provincial taxes. Last year, British Columbia became the first foreign government to issue an offshore bond denominated in yuan. The issuance of the one-year bond - nicknamed the “dim sum” bond for the Chinese cuisine that involves serving a variety of small delicacies - raised 2.5 billion yuan (C$433.8 million or $403.1 million).
th‘ I ink Vancouver has a lot of advantages. We have a huge Asian community that includes many who have Cantonese and Mandarin language skills.” CHRISTY CLARK BRITISH COLUMBIA PREMIER
Hong Kong, Taipei, and Singapore are already currency hubs while London and Frankfurt will soon join them after agreements between the central banks of China, Germany and the UK were announced earlier this year. No city in North or South America has developed a major settlement center yet.
Advantages of becoming a clearing and settlement center include reducing currencyexchange costs for Canadian companies, which would be able to convert Canadian dollars directly into RMB instead of having to pay fees to first convert the funds into US. dollars. The currency hub is also expected to generate jobs and increase foreign trade and investment in the city that is selected.
China’s bid to make the renminibi a global currency represents another high-profile step in the country’s financialreform plan. The yuan is now one of the world’s 10 most frequently traded currencies, according to the Bank of International Settlements.