UK on Track to Rule RMB Market - Launches 1st Non-Chinese Offshore Yuan Bond

Financial markets participants trading UK government issued bonds will benefit from a new product range that offers non-Chinese Renminbi (RMB) denominated bonds. The new offering highlights London's commitment to positioning itself as an offshore financial centre for Chinese markets.

The non-Chinese offshore bond is the first of its kind available for investment. The government is taking these steps in recognition of the increasingly prominent role that renminbi is playing in the global economy and financial markets, including as a potential future reserve currency.

Commenting on the UK government renminbi bond issuance, Chris Cummings, Chief Executive of TheCityUK, said in a statement: “The Government’s announcement today that it will issue the world’s first non-Chinese sovereign offshore Renminbi bond demonstrates its commitment to ensuring London’s position as the Western world’s Renminbi trading centre.

It will open opportunities across the industry both now and in the years to come. Innovation such as this creates lasting economic growth and high value jobs across the whole of the UK by encouraging investment and attracting new opportunities to the country.”

As part of the government's conclusion of the Economic and Financial Dialogue (EFD) with China, it will launch the bond and the proceeds will be used to finance the UK government’s reserves of foreign currency.

According to the government's official notification, it will use the investments to finance the UK’s reserves held in the government’s Exchange Equalisation Account, which include financial assets denominated in foreign currencies, gold and International Monetary Fund Special Drawing Rights. In particular, the proceeds are expected to be reinvested in the renminbi offshore market.

The latest offering, backed by the UK government, gives investors the value addition of the UK government's strong and stable rating in the global markets. Furthermore, it supports the UK's claim of being the epicentre of Chinese financial trading outside the mainland.