Ma­jor lenders pre­pare for yuan in­ter­na­tion­al­iza­tion

China Daily (USA) - - BUSINESS - By JIANG XUE­QING jiangx­ue­qing@ chi­nadaily.com.cn

The in­clu­sion of the yuan in the Spe­cial Draw­ing Rights bas­ket of the In­ter­na­tional Mon­e­tary Fund will bring great busi­ness op­por­tu­ni­ties to com­mer­cial banks with an in­te­grated plat­form serv­ing clients on­shore and off­shore.

The hold­ers and users ofSDR will be in­evitably ex­posed to the yuan as a re­sult of its in­clu­sion in the cur­rency bas­ket, said Chen Bing, head ofBNPParibas ren­minbi com­pe­tence.

“Our ren­minbi busi­ness has been evolv­ing through dif­fer­ent stages of ren­minbi in­ter­na­tion­al­iza­tion. SDR in­clu­sion adds an­other di­men­sion— an im­me­di­ate busi­ness im­pact is the in­creas­ing demand for risk man­age­ment,” he said.

Such cur­rency and in­ter­est rate hedg­ing needs are ex­pected to con­tinue grow­ing as cor­po­ra­tions, fi­nan­cial in­sti­tu­tions and in­di­vid­u­als, both do­mes­tic and in­ter­na­tional, are more ex­posed to Chi­nese markets and the yuan, he added.

Euro­pean cen­tral banks, which have SDR hold­ings and loans, came toBNPParibas ask­ing how they will be able to proac­tively man­age the cur­rency and in­ter­est rate ex­po­sure with the yuan be­ing ac­cepted as a global re­serve cur­rency.

Even be­fore the IMF’s de­ci­sion, global cen­tral banks have al­ready been in­vest­ing in the yuan.

Ac­cord­ing to an IMF sur­vey con­ducted for the SDR re­view, 38 out of 130 cen­tral banks held a com­bined to­tal of SDR 51 bil­lion of ren­minbi as­sets ($75 bil­lion) as of the end of 2014, com­pris­ing 1.1 per­cent of to­tal of­fi­cial re­serve as­sets at that time. Of­fi­cial hold­ings of the yuan are very likely to rise over time, given China’s grow­ing eco­nomic clout and in­flu­ence, said HSBC Hold­ings Plc in a re­port in Septem­ber.

Ef­fec tive from Oct 1, not only the cen­tral banks but also supra­na­tional or­ga­ni­za­tions such as theWorld Bank and some cor­po­rates have po­ten­tial needs toman­ageth­eir cur­rency and in­ter­est rate ex­po­sure.

As a global bank serv­ing a broad client base both in China and across the world, BNP Paribas de­vel­oped and pro­vided prod­ucts deal­ing with for­eign ex­change and in­ter­est rate ex­po­sure to the clients be­fore the SDR in­clu­sion.

“BNP Paribas is deeply com­mit­ted to serv­ing the China mar­ket and de­vel­op­ing our RMB busi­ness, such as SDR hedg­ing prod­ucts,” Chen said.

He noted that as­sist­ing off­shore par­tic­i­pants to ac­cess the China in­ter­bank bond mar­ket, panda bonds and green bonds are the busi­nesses that BNP Paribas has been ac­tively en­gag­ing in by lev­er­ag­ing its truly in­te­grated plat­form with strong lo­cal knowl­edge and global ex­per­tise.

XU JIN­BAI / FOR CHINA DAILY

A worker at the China Con­struc­tion Bank counts ban­knotes at a branch in Ha­ian, Jiangsu prov­ince.

Chen Bing, head of BNP Paribas ren­minbi com­pe­tence

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