Renminbi use surges in London in spite of Brexit

London’s offshore yuan activities continue to surge despite Brexit uncertainties, according to the latest figures from China’s central bank.

The new figures, reflecting bilateral business confidence and the renminbi’s growing international use, showed London’s renminbi-denominated business transactions in August were 60 percent higher than July’s.

The new figures were announced on Friday by Jin Mei, the People’s Bank of China’s chief representative in Europe, at a celebration hosted by London’s renminbi clearing bank, China Construction Bank.

CCB London celebrated the significant milestone of clearing 10 trillion yuan ($1.5 trillion) of transactions between June 2014, when it was appointed by PBOC to be London’s official renminbi clearing bank, and August 2016.

An official clearing bank facilitates efficient clearing of offshore renminbi transactions by working with the central bank.

Brexit refers to the June 23 referendum in which British citizens voted to leave the European Union.

In April, London overtook Singapore to become the world’s second-largest offshore renminbi center behind Hong Kong.

Wang Zuji, president of CCB Corp, said CCB London fulfilled its promise of two years ago to provide “fair, efficient, accurate and professional clearing services”, and contribute to Sino-British economic development and London’s position as an important offshore renminbi center.

CCB London provides yuan clearing services from 1 am to 9 pm London time to cover the trading hours difference between Asian and North American markets.

Its yuan clearing enquiry service runs 24 hours. Ninetyfive percent of CCB London’s yuan clearing services are completed through its clearing systems automatically.

CCB London provides yuan clearing services for 67 financial institutions, of which only 24 are Chinese organizations, which demonstrates its international client base.

Key clients include international banks such as HSBC, Standard Chartered, Citibank and Bank of America, and other financial institutions including the London Stock Exchange, London Metals Exchange and Chicago Mercantile Exchange.

The fast growth of London’s offshore yuan activities is taking place as the renminbi is increasingly used internationally as a trading and investment currency, and its growth as a global reserve currency will be marked by its inclusion in the International Monetary Fund’s basket of special drawing rights currencies in October.

Jin said the SDR inclusion will create new opportunities for the development of the London offshore RMB market and also RMB internationalization.

The PBOC also will use policy initiatives to support RMB internationalization, Jin said. It will further deepen financial reforms, promote interest rate and exchange rate liberalization, widen the opening of the financial market, and realize orderly RMB convertibility under the capital account.

60 percent increase in renminbi-denominated business transactions in August over July, reflecting bilateral business confidence and the renminbi’s growing international use 10 trillion yuan in transactions cleared by CCB London between June 2014, when it was appointed by PBOC to be London’s official renminbi clearing bank, and August 2016