Renminbi moves another step closer to convertibility

China’s move to allow foreign lenders greater access to its interbank bond market will encourage both renminbi offshore trade settlement and liquidity, and marks another step towards the currency’s long-term convertibility.
Jens Scharff-Hansen
Jens Scharff-Hansen

Use of the US dollar as a settlement currency has long hindered both mainland Chinese companies and their overseas trading partners. But bankers expect the series of regulatory changes by China’s central bank, the People’s Bank of China PBoC, to significantly encourage growth of both the international renminbi trade settlement programme and renminbi liquidity in Hong Kong.

Specifically, the policy change announced in August makes it easier for overseas participating banks ie, banks originating and receiving payments for companies trading with Chinese firms to access the mainland’s interbank bond market. The development follows a series of policy changes over recent months, including the July circular from the Hong Kong Monetary Authority HKMA encouraging...

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