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Adding renminbi to the mix
29 July 2011
The rapid growth of renminbi (RMB) trade settlement has the potential to change the face of global trade. Oliver O’Connell examines what the implications may be for the wider trade finance market.
Read more:
RMB trade finance
renminbi
China Development Bank
China imports
China Exim
HSBC RMB
Standard Chartered RMB
reserve currency
There is no precedent for what China is trying to do. There is no instruction manual for the internationalization of a currency. The renminbi (RMB) trade settlement scheme has the potential to permanently shift the centre of gravity of the entire trade finance market. We talk about changing regulations, such as UCP600 or the impact of Basel III, as having a seismic impact on the market, but beneath all of that has been the fact that trade finance is largely conducted in US dollars. Taking the size and influence of China in global trade and introducing an internationalised RMB could change that.
“This is the biggest change to the world of trade finance in the whole of my career. RMB trade finance is an iceberg, the tip of which we have only just seen above the surface,” observes one Hong Kong-based veteran trade financier.
The global financial crisis...
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