New York is looking to join a short list of global hubs that are established renminbi trading centers, aiming to tap into the Chinese currency’s insatiable growth in usage in recent years. Indeed, the bid to become one of the marquee nexuses for renminbi use has been met with recent challenges, though success in this realm could make New York one of just three other cities – Hong Kong, London, and Singapore – that process large volumes of RMB payments.
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As recently as December, the attitude surrounding large-scale RMB clearing in New York was met with trepidation, given the existing challenges in implementing such an initiative. Chinese and US geopolitical relations have since waxed and waned and the underdevelopment of the RMB financial market still presents some logistical challenges for the city.
Arguably the greatest boon for the RMB in terms of international standing came last year when the Chinese currency made a successful bid to the International Monetary Fund’s (IMF) global currency basket, joining the US dollar, euro, British sterling and Japanese yen.
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The establishment of New York as a RMB trading center would represent a significant development for the city, namely as it would constitute the first RMB-denominated renmibi certificate of deposit to be settled in the United States. RMB payments have been on the rise globally, as reported by SWIFT’s global currency tracker – presently Hong Kong, London, and Singapore are the top three cities in the world for processing payments in the currency.
Currently Hong Kong is the globe’s largest offshore RMB center, processing 70.4% of payments, with London and Singapore covering 24.4% and 21.6% respectively, per a recent SWIFT report.
The Industrial and Commercial Bank of China Ltd (ICBC)’s Chairman Jiang Jianqing will be meeting today with the former mayor of New York Michael Bloomberg to outline and discuss progress in this space. Proponents of the RMB will be tuned into the meeting, which could lay the groundwork for future progress in this space as New York looks to tap into the global processing share presently dominated by Hong Kong.
According to Mr. Jiang in a recent statement on the meeting: “The launch represents a significant milestone in serving to meet the growing demands among investors in the United States and around the world to have access to the RMB.”