Canada’s new RMB hub ad­van­tages

China Daily (Canada) - - FRONT PAGE - By EDDY LOK in Toronto

On­tario’s Fi­nance Min­is­ter said that Canada be­com­ing the first RMB trad­ing hub for the Amer­i­cas will en­able Canadian busi­nesses to im­prove their pro­duc­tiv­ity and stim­u­late eco­nomic growth across Canada.

Charles Sousa made his com­ments on May 28 at an event hosted by Bloomberg with the theme: ‘China – Nav­i­gate the New Silk Route – Tak­ing Ad­van­tage of Canada’s New RMB Hub.

On March 23 Canada launched its RMB hub and be­came the lat­est to join the grow­ing num­ber of such cen­ters around the world, spurred by China’s strong push to see its cur­rency used on a global scale.

The hub re­in­forces Toronto’s stature as North Amer­ica’s sec­ond-largest fi­nan­cial cen­ter be­hind New York City, and is ex­pected to sup­port in­creased trade be­tween China and Canada that has seen the Fed­eral gov­ern­ment and pro­vin­cial gov­ern­ments step­ping up trade and in­vest­ment ac­tiv­i­ties with Chi­nese in­ter­ests in re­cent years.

The Toronto RMB hub serves as con­duit for 24-hour cov­er­age of global ren­minbi trans­ac­tions, en­abling busi­nesses to con­vert Canadian dol­lars di­rectly into Chi­nese cur­rency.

The use of ren­minbi for global trad­ing trans­ac­tions in­clud­ing pay­ments has con­tin­ued to ac­cel­er­ate and grow. Over a rel­a­tively short pe­riod of time, it has be­come one of the most ac­tively traded cur­ren­cies.

As of March, there were 15 RMB hubs around the world, and with Canada be­ing the only cen­ter in the Amer­i­cas, it will pro­vide in­vestors from Amer­i­cas more ef­fi­cient ac­cess to China, ac­cord­ing to Sousa.

Tom Orlik, Bei­jing-based chief Asia econ­o­mist for Bloomberg, said the role of yuan as an in­ter­na­tional cur­rency has been hap­pen­ing since 2009 and “it is dif­fi­cult not to be im­pressed with its grow­ing role as in­ter­na­tional re­serve cur­rency”.

In his talk, China Macro Out­look 2015, Orlik said: “The ques­tion of when will Chi­nese yuan be­come an in­ter­na­tional cur­rency, has an an­swer … it is al­ready hap­pen­ing.”

He said the Chi­nese econ­omy headed into 2015 marked by slower eco­nomic growth, but the cen­tral gov­ern­ment has taken steps to pre­vent it from slow­ing down and avoid­ing any chance of the yuan de­pre­ci­at­ing fur­ther.

“There is a ques­tion whether the yuan would be­come a chan­nel for stim­u­lus but there could be is­sues of yuan sta­bil­ity and mild de­pre­ci­a­tion. There also have been ques­tions when it could sig­nif­i­cantly be­come a global re­serve cur­rency. Is it less than a year or would it be more than five years for the yuan to reach that sit­u­a­tion?” he asked.

An­other ques­tion is whether the In­ter­na­tional Mon­e­tary Fund would al­low the yuan a place in its SDR bas­ket.

“This would be a pol­icy de­ci­sion. The case is not clear cut,” Orlik said.

Orlik is op­ti­mistic about China’s on-go­ing re­forms, say­ing the cen­tral gov­ern­ment had been very ag­gres­sive when it comes to the ex­change rate, in­ter­est rate and eco­nomic and fi­nan­cial lib­er­al­iza­tion.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.