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CNH Tracker-Trade, not deposits, may be London's calling
January 23, 2014 / 8:05 AM / 4 years ago

CNH Tracker-Trade, not deposits, may be London's calling

By Michelle Chen
    HONG KONG, Jan 23 (Reuters) - Trade finance in China's yuan
currency may become a deciding factor in London's favour as more
European cities battle to capture the growing offshore yuan
business outside Asia. 
    As a latecomer to the yuan party for a patchy two years,
London's slow pace to accumulate yuan deposits, a common
parameter to evaluate the progress of a yuan centre, has raised
doubts about its capacity to win market share.
    Luxembourg is currently Europe's leader in yuan bonds, funds
and loans, with the largest pool of yuan deposits in the region
and 40 yuan bonds listed on its stock exchange.
    But the latest report by the City of London reveals some
statistics showing the world's biggest foreign exchange hub has
taken giant strides in yuan trade finance, a subject which is at
the core of expanding the "redback's" footprint in global trade.
    Total trade finance denominated in yuan, including letters
of credit and import/export financing, amounted to 27.9 billion
yuan ($4.61 billion) in the first half of 2013, more than double
that of a year earlier.
    While that amount may be paltry compared to the monthly
trade volumes of nearly 450 billion yuan that pass through Hong
Kong's ports, the rate of growth shows increasing desire for
global companies to adopt the yuan in international trade.
    It is in line with results from global transaction services
organisation SWIFT. The yuan overtook the euro in October to
became the second-most used currency in trade finance, with a
market share of 8.66 percent, compared with 1.89 in January
    That rapid growth is mainly due to fast expansion of
cross-border payments in yuan by companies, especially those
from China, where yuan trade settlement now accounts for more
than 20 percent of total trade.
    "We see a lot of demand from clients who are interested in
yuan trade finance as they do not want to take foreign exchange
risks," said a banker involved in yuan business at a Chinese
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