June 29, 2014 / 2:31 PM / 4 years ago

China and Luxembourg prepare for currency clearing deal

BRUSSELS, June 29 (Reuters) - The People’s Bank of China and the central bank of Luxembourg have signed a memorandum of understanding, a step towards designating a renminbi clearing bank in Luxembourg, Grand Duchy authorities said on Sunday.

“The MoU aims to establish a cooperation between the two institutions in terms of oversight, exchange of information and assessment pertaining to the renminbi business in Luxembourg in view of a forthcoming designation, by the PBoC, of a renminbi clearing bank in Luxembourg,” the Luxembourg central bank (BCL) said.

“The BCL will monitor the renminbi market in Luxembourg and share relevant data with the PBoC,” the bank said.

The agreement is a new step toward expanding the Chinese currency’s footprint in the fast-growing offshore renminbi market.

Earlier on Sunday the French central bank said it had signed an MoU with its Chinese counterpart to set up a renminbi payment system in Paris.

The Chinese central bank said earlier this month it had designated Bank of China, the country’s main foreign exchange lender, as the yuan clearing service bank in Frankfurt.

Global financial capitals, such as London and Singapore, have been racing to secure a slice of the fast-growing Chinese offshore currency business.

Wedged between France, Germany and Belgium, Luxembourg is one of the world’s smallest countries, with just over half a million people. But it is a major financial centre, second only to the United States for investment funds, and a leading private banking hub. (Reporting by Justyna Pawlak; editing by Keiron Henderson)

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