* China, Canada agree to 200 bln yuan currency swap
* Americas' first yuan clearing hub to be in Toronto
* China to give Canada 50 bln yuan RQFII quota
(Adds timeframe of currency swap)
By Andrea Hopkins
BEIJING, Nov 8 The central banks of China and
Canada have agreed to a currency swap worth 200 billion yuan
($32.67 billion) or C$30 billion, according to a Canadian
government statement issued at a meeting of Asia Pacific nations
The swap will be effective for three years, according to a
separate statement from China's central bank. The agreement was
announced after Canadian Prime Minister Stephen Harper met
Chinese Premier Li Keqiang.
China's central bank, the People's Bank of China, will also
appoint a clearing bank in Canada for yuan - or renminbi, as the
currency is also called - as part of a Memorandum of
Understanding, said the statement. It did not say which bank
would be appointed as the clearing bank, but it is likely to be
one of China's four largest banks.
China's central bank said in its statement that the yuan
clearing bank would be in Toronto.
The currency swap will help set up the clearing bank, and
allow the two banks to swap currencies if needed to ease trade
and investment. The yuan clearing bank would be the first in the
Americas, and allow Canadian financial institutions to use the
clearing bank to process payments for their customers in yuan.
The move is in line with Beijing's ambition to promote its
currency to more international investors and eventually turn the
"redback" into a global reserve currency, while at the same time
expanding China's already considerable political and economic
"This is a fantastic announcement for Canada and China
relations, a terrific move for Canadian businesses to be able to
compete more abroad, not only direct-to-China investment but ...
as more RMB/CNY activity takes place around the world," said
C.J. Gavsie, managing director of foreign exchange sales at BMO
China will additionally give Canadian investors the right to
invest up to 50 billion yuan initially in China's capital
markets. The quota will be granted under the Renminbi Qualified
Foreign Institutional Investor (RQFII) scheme.
That programme, launched in 2011, allows financial
institutions to use offshore yuan to invest in the mainland's
securities markets, including in stocks, bonds and money market
(1 US dollar = 1.1325 Canadian dollar)
(1 US dollar = 6.1225 Chinese yuan)
(Additional reporting by Adam Rose and Ben Blanchard; Writing
by Paul Carsten; Editing by Koh Gui Qing, Jeremy Laurence and