Yuan expected to be int’l currency around 2020 (2)

Major foreign cities compete to become offshore yuan market

All major reserve currencies in the world have a big offshore market. A mature offshore yuan market can effectively promote internationalization of the yuan, and help the yuan become an international currency more easily.

China has made great achievements in building offshore yuan markets in recent years, especially the offshore market in Hong Kong. Statistics showed that as of November 2011, more than 132 Hong Kong-based financial institutions offering yuan services had provided loans of 25.6 billion yuan, and had deposits over 627 billion yuan, accounting for about 10 percent of their total deposits. The yuan has become the third most widely used currency in the region after the Hong Kong dollar and U.S. dollar.

Shen Jianguang, managing director of Mizuho Securities Asia Limited, said that following the establishment of the China Hong Kong offshore center, London and Singapore are both in active consultation with the Chinese government about formally becoming the offshore markets, and the Chinese government is also optimistic. China’s development level is much higher than many Southeast Asian countries.

First Secretary of the British Embassy in economic and fiscal policy Peter Mumford said, “A lot of yuan products are almost simultaneously released in Hong Kong and London. And in London, the offshore yuan products develop so rapidly that there have been hundreds of millions of yuan deposits. We have reasons to believe that yuan offshore market in London will grow faster.”