Business / Markets

Luxembourg wants bank for yuan deals

By Cecily Liu in London (China Daily) Updated: 2014-02-27 07:30

Luxembourg Minister of Finance Pierre Gramegna said the state would benefit from having an official clearing and settlement bank for yuan transactions and a Renminbi Qualified Foreign Institutional Investors quota.

Gramegna said on Wednesday he will visit China in either June or July and express these two wishes to the Chinese government in the hope they will be fulfilled.

Luxembourg wants bank for yuan deals

Luxembourg wants bank for yuan deals

Gramegna was speaking at The Luxembourg Renminbi Forum, a one-day event attracting 300 financial experts from all over Europe, and the first of its kind in Luxembourg.

The announcement shows Luxembourg's eagerness to become an offshore renminbi hub, in competition with other Western financial centers such as Paris, Frankfurt, London and New York.

Just last week, British Chancellor of the Exchequer George Osborne announced the British and Chinese governments are in active discussions about setting up a clearing bank in London for the yuan. He said London will also host a large-scale international forum on the renminbi this summer.

The RQFII program, which allows qualified financial institutional investors overseas to invest in China's onshore financial markets directly using the renminbi, is a step toward the Chinese currency's internationalization.

First launched in 2011 and tested in Hong Kong using a quota of 20 billion yuan ($3.3 billion), RQFII funds grew to 270 billion yuan by the end of 2012. An RQFII quota of 80 billion yuan was also granted to London last year.

An official clearing bank facilitates the efficient clearing of offshore renminbi transactions, achieved through the appointed bank's direct cooperation with the People's Bank of China.

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