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Crossing borders with renminbi
28 July 2009
As China's central bank relaxes regulations Dickon Harris examines the first renminbi cross-border trade deals completed so far.
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renminbi
China trade
foreign exchange risk
crossborder trade
yuan
This month the Bank of China (BOC), China’s central bank, passed legislation permitting cross-border trade to be done for the first time in renminbi (RMB/yuan).
The development can be seen as a push for the internationalisation of the Chinese currency in global trade. BOC launched a pilot programme with a handful of international banks to facilitate trade in renminbi with regions in mainland China including Shanghai and some cities in Guangdong province to do trade in renminbi with Hong Kong, Macau and member countries of Asean.
The renminbi trade settlement pilot has 400 approved entities so far but will soon expand into more provinces. The government has hopes that the scheme will be one of the first steps to eventually help establish the renminbi as a reserve currency offering full cash convertibility, and trade settlement. According to estimates released by...
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