London cemented its position as a leading center for offshore renminbi trading after China Construction Bank, the country’s second largest lender, was selected as a clearing bank for the Chinese currency.
The decision is expected to be announced during a trip to London next week by Chinese Premier Li Keqiang, the Financial Times reported Wednesday.
It will complete Britain’s infrastructure for trading the currency as financial capitals around the world vie for a slice of the fast-growing renminbi trade, the report said.
Britain is keen to defend its status as the biggest offshore renminbi trading center outside Asia but faces competition from Frankfurt and Luxembourg.
The clearing bank allows investors to cut the risk from making overseas payments in renminbi and should make trading the currency more efficient and liquid.
It may also attract Chinese companies keen to invest in Europe and make it easier for investors to gain access to China’s onshore capital markets, the report said.
In March, China and Britain signed an agreement on clearing and settlement arrangements around the time a similar deal was sealed with Germany.
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