China will started direct trading between the yuan and the euro today as the world\u2019s second-largest economy seeks to spur global use of its currency.<\/p>\n
The move will lower transaction costs and so make yuan and euros more attractive to conduct bilateral trade and investment, the People\u2019s Bank of China said today in a statement on its website. HSBC Holdings Plc said separately it has received regulatory approval to be one of the first market makers when trading begins in China\u2019s domestic market.<\/p>\n
The euro will become the sixth major currency to be exchangeable directly for yuan in Shanghai, joining the U.S., Australian and New Zealand dollars, the British pound and the Japanese yen. The yuan ranked seventh for global payments in August and more than one-third of the world\u2019s financial institutions have used it for transfers to China and Hong Kong, the Society for Worldwide International Financial Telecommunications said last week.<\/p>\n
\u201cIt\u2019s a fresh step forward in China\u2019s yuan internationalization,\u201d said Liu Dongliang, an analyst with China Merchants Bank Co. in Shenzhen. \u201cHowever, the real impact on foreign exchange rates and companies may be limited as onshore trading volumes between yuan and non-dollars are still too small to gain real pricing power.\u201d<\/p>\n
Transactions exchanging yuan for dollars totaled 12.2 trillion yuan in the first half of 2014, dwarfing the 110.4 billion yuan worth of trades for euros and the 251.7 billion yuan for yen, the PBOC said in a monetary policy report last month.<\/p>\n
Trading Ties<\/p>\n
China\u2019s trade with European Union nations grew 12 percent from a year earlier to $404 billion in the first eight months of 2014, according to data from the Asian nation\u2019s customs department. That compares with just $354 billion with the U.S. during the period.<\/p>\n
French and German companies lead among countries outside of greater China in the use of the yuan, according to a July report by HSBC that was based on a survey of 1,304 businesses in 11 major economies that have ties with mainland China. Some 26 percent of French corporates and 23 percent of German companies were using the currency to settle trade, the highest proportions apart from mainland China, Hong Kong and Taiwan.<\/p>\n
Last One<\/p>\n
China appointed yuan clearing banks this year in Frankfurt, Paris and Luxembourg, and Germany\u2019s financial capital as well as Paris were awarded quotas under the Renminbi Qualified Foreign Institutional Investor program to invest the currency raised offshore in China\u2019s domestic capital markets.<\/p>\n
\u201cGiven the appointments of renminbi clearing banks in Frankfurt and Paris, today\u2019s announcement is largely expected,\u201d Australia & New Zealand Banking Group Ltd.\u2019s economists led by Liu Li-gang wrote in a research note today. The agreement marks a \u201csignificant milestone\u201d in yuan internationalization as the euro is the only G3 currency that has not had direct conversion with the yuan, Liu said.<\/p>\n
The European Central Bank is able to draw on a maximum 350 billion yuan ($57 billion) swap line from the People\u2019s Bank of China under the terms of an agreement signed in October 2013. The PBOC can access 45 billion euros ($57 billion) under the terms of the currency swap.<\/p>\n
Source: Bloomberg<\/p>\n","protected":false},"excerpt":{"rendered":"
China will started direct trading between the yuan and the euro today as the world\u2019s second-largest economy seeks to spur global use of its currency. The move will lower transaction costs and so make yuan and euros more attractive to conduct bilateral trade and investment, the People\u2019s Bank of China said today in a statement … Continue reading “De-dollarization: Europe and China start direct trading”<\/span><\/a><\/p>\n","protected":false},"author":2961,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[144,1617,10133,10132,70,1602,187,2646],"class_list":["post-16196","post","type-post","status-publish","format-standard","hentry","category-news","tag-china","tag-currency","tag-de-dollarization","tag-direct-trading","tag-eu","tag-euro","tag-european-union","tag-yuan"],"cc_featured_image_caption":{"caption_text":false,"source_text":false,"source_url":false},"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/posts\/16196","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/users\/2961"}],"replies":[{"embeddable":true,"href":"https:\/\/praag.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16196"}],"version-history":[{"count":2,"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/posts\/16196\/revisions"}],"predecessor-version":[{"id":16198,"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/posts\/16196\/revisions\/16198"}],"wp:attachment":[{"href":"https:\/\/praag.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16196"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/praag.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16196"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/praag.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16196"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}