Canada is launching a nationwide trading hub Monday that will make it easier for firms in the Western Hemisphere to do business in renminbi.
China’s central bank is backing the new Renminbi Trading Hub for the Americas, which will allow firms in numerous countries to conduct their transactions in the currency through Canadian banks, The Wall Street Journal reported.
The system is expected to save firms time and fees.
Industrial and Commercial Bank of China’s Canadian subsidiary will clear the transactions.
The launch of this hub, like others in Singapore and London, is part of China’s efforts to promote greater use of its currency in global trade and investment.
The renminbi, also known as the yuan, became the fifth-most-used currency in the world in November, surpassing the Canadian and Australian dollars, figures from the Society for Worldwide Interbank Financial Telecommunication show.
The hub is expected to boost Canada’s trade with China as it seeks to diversify from its heavy dependence on the United States. China is Canada’s second-largest trading partner.
US banks seeking to take advantage of the Canadian hub for their commercial clients must do so through a Canada-based bank, likely for a fee.
William Zhu, chief executive of ICBC’s Canadian subsidiary, estimated that about 17 percent of the US import-export firms that do business with China already use the renminbi, the report said.
The hub will allow firms to pay their Chinese counterparties in renminbi on a same-day basis.
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