BERLIN/FRANKFURT, March 27 Germany's financial
capital Frankfurt will become the first hub for renminbi payment
transactions in Europe with the German and Chinese central banks
set to seal the deal this week, two financial sources told
Reuters, pipping a similar move by London.
The sources said on Thursday that the Bundesbank and the
People's Bank of China are due to sign a memorandum of
understanding during Chinese President Xi Jinping's state visit
to Germany on Friday.
Such an agreement would make it easier for investors to
complete financial transactions by increasing cooperation on
international payments and establishing a clearing bank for
China's currency as part of the deal.
There is currently no clearing service for renminbi trading
Beijing's tie-up with Frankfurt would not, however, be
exclusive - Britain and China are due to sign an agreement on
renminbi clearing and settlement next Monday, setting out how
their two central banks will cooperate in establishing a
The Bundesbank declined to comment when contacted by Reuters
but Bundesbank board member Joachim Nagel told German business
daily Handelsblatt he was confident about Frankfurt's prospects.
"The discussions we've had so far make me very optimistic
that Frankfurt will get a clearing bank," he was quoted as
"That would, at the same time, be the starting point for
establishing a yuan centre."
The renminbi is not yet freely tradable but by building up
trading hubs outside of Asia, China is removing trade barriers.
Until now business has mainly been conducted via Hong Kong.
Financial sources said subsidiaries of Chinese banks such as
the Bank of China would be considered for the
A government source said the cooperation would include the
sale of bonds and other Chinese financial products but not
Exchange operator Deutsche Boerse has been
pushing for a stronger role for Frankfurt as a European centre
for financial market activities in China but said this would
only happen if policymakers worked together as a team.
(Reporting by Reinhard Becker, Andreas Kröner, Gernot Heller,
Andreas Framke, Andy Bruce, David Milliken; Writing by Michelle
Martin; Editing by Toby Chopra)