| NEW YORK
NEW YORK Morgan Stanley and Citigroup Inc are
among those vying to be the designated U.S. bank clearing yuan
trades in the United States alongside Bank of China Ltd (BoC),
China's fourth-biggest bank by assets, a senior BoC executive
said on Wednesday.
Appointing banks to clear yuan trades is part of
China's drive to encourage worldwide use of the currency, also
known as the renminbi, which it hopes would some day supplement
or rival the dollar as a global reserve currency.
Unlike other countries where China is also trying to expand
the yuan's reach, the United States will have two banks to clear
renminbi trades, Xu Chen, president and chief executive officer
of BoC , said in New York.
This is in part because the advocacy group led by former New
York mayor Michael Bloomberg that has championed wider usage of
the yuan in the United States had asked China to allow a U.S.
bank to clear renminbi trades in the country, Chen said.
China usually designates just one Chinese bank to clear all
yuan trades in each country outside its borders.
Chen said Morgan Stanley and Citi are both
looking into submitting their respective bids to the Chinese
central bank, the People's Bank of China.
"Based on our understanding, the (advocacy) group suggested
to the People's Bank of China (PBOC) that it adopts the approach
of appointing one Chinese bank and one U.S. bank," he said.
The sheer volume of trade should help catapult the United
States into the second-largest offshore yuan clearing centre
after Hong Kong in three to five years, Chen said.
BoC was only appointed last month as the designated bank to
clear yuan transactions in United States, which can currently be
cleared through Hong Kong, London or Singapore, the major
renminbi clearing centers outside China.
To that end, BoC plans to expand its yuan trading desk in
New York and sell renminbi hedging services in the city before
year-end, Chen said.
Morgan Stanley and Citi declined to comment. The PBOC was
not immediately available for comment.
Despite strong trade ties between China and the United
States - the world's two largest economies - Beijing has been
slow in making inroads to set up a yuan market in the United
States compared with other countries.
Chinese and U.S. officials have said this is partly due to a
desire by some within the U.S. government to protect the
dollar's status as the world's pre-eminent currency.
The United States was China's largest bilateral trade
partner last year, with $558 billion worth of goods and services
exchanged between the two countries, Chinese data showed.
The advocacy group for the yuan, which counts ex-Securities
and Exchange Commission chair Mary Schapiro and former U.S.
Treasury secretaries Timothy Geithner and Henry Paulson as its
vice chair and co-chairs, includes JPMorgan Chase & Co,
Wells Fargo & Co and Bank of America Corp as its
The yuan was the fifth-most-active currency for global
payments in July, accounting for 1.9 percent of the market
share, according to global transaction service provider SWIFT.