June 27, 2014 / 4:00 PM / 5 years ago

UPDATE 1-Swiss host Chinese central bank to discuss renminbi hub plan

(Adds Swiss government comment)

ZURICH, June 27 (Reuters) - Switzerland touted its qualifications to be a hub of renminbi trading on Friday, as its central bank chief and finance minister hosted People’s Bank of China (PBOC) Governor Zhou Xiaochuan at a private event for Swiss and Chinese bankers.

Competition is fierce among Europe’s major financial centres to trade in China’s currency. Frankfurt and Luxembourg are vying with London, the favourite of many analysts, and Switzerland is trying to muscle into the competition.

Friday’s event near Zurich, the second day of Chinese-Swiss meetings on the issue, gave the Swiss a chance to make their case, according to the Swiss Banking Association, which arranged the meetings, in conjunction with the China Banking Association.

Swiss banks want a swap line between the Swiss National Bank (SNB) and the PBOC, and thus for clearings through a Chinese bank based in Switzerland.

Efforts are under way which could lead to a renminbi-Swiss franc swap line, allowing renminbi clearing by a Swiss bank, Switzerland’s banking lobby said.

“The Swiss authorities are making every effort to provide the necessary framework conditions,” to shape Switzerland into a renminbi trading hub, the Swiss government said in a statement following meetings with Chinese officials including Zhou.

A host of high-profile Swiss bankers including Credit Suisse Chairman Urs Rohner, Julius Baer Chief Executive Boris Collardi, and former UBS Chairman Kaspar Villiger also made Switzerland’s case to Chinese officials.

Representatives of the two countries plan to meet next year in China, the Swiss government said.

China has relaxed controls over the last five years to establish the yuan as an international currency of trade and reduce its reliance on other currencies. The yuan is expected to become a so-called reserve currency, meaning it will be stockpiled by central banks, and to be fully convertible into other currencies by 2015.

Analysts say London looks best placed to become Europe’s main offshore yuan centre given its role as the world’s biggest foreign exchange hub. (Reporting by Katharina Bart; Additional reporting by Sujata Rao; Editing by Larry King)

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