Bank of China tapped for RMB clearing

The Bangko Sentral ng Pilipinas (BSP) and People’s Bank of China (PBOC) have designated Bank of China Manila as the clearing bank for renminbi (RMB) business in the Philippines as transactions surged 45 percent in the first half alone.

Deng Jun, country head of Bank of China Manila, said the clearing bank would enable local financial institutions to transfer RMB funds and participate in China’s foreign exchange market, security market and bond market.

“A clearing bank will not only make local RMB transactions easier in support of the already existing Philippine RMB Trading Community that was launched last year, it will also boost local investments and other financial activities, further strengthening the economic relationship between the Philippines and China,” Deng said.

He said the clearing bank would also help local banks expand their product scope and provide better convenience for clients and investors looking to enter the Chinese financial market, increase their RMB asset holdings, or diversify their investment portfolios.

With a local clearing bank in place, RMB transactions are projected to grow as more Chinese tourists, traders and investors, along with their Filipino counterparts, grow more confident in using the currency.

“This new facility will help drive the currency’s use for payments and investments, further promoting cross-border settlements, trade financing, project investments, and loans. Ultimately, this projected surge in financial activity will foster the shared development of both countries,” he said.

The appointment of an RMB clearing bank, Deng said, comes at an opportune time amid the steady increase in RMB transactions in the country.

According to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the total amount of RMB cleared in the Philippines jumped by 45.3 percent to RMB 127.4 billion in the first half as the total number of RMB clearing activities surged by nearly 74 percent to 12,116 items.

But while Bank of China Manila expects this trend to continue, it also mentioned that its clearing facilities would take time to operationalize, and that its systems would need to be prepared.