Boleat adds that maintaining a single pool of offshore yuan is important for the development of a liquid, global offshore market. "We hope that developments in other centers will not see segregated pools of renminbi being developed."
Fang of BOC says: "In the beginning, it's better to take advantage of Hong Kong's system. But we should never underestimate London's potential in conducting renminbi business. We all believe that there's great potential for London to be an offshore center."
Zhu Yinan, a senior associate at the international law firm Clifford Chance, adds that the People's Bank of China, Bank of England and other market participants are constantly monitoring the progress and evaluating the need for having a separate settlement and clearing system for London.
"As we are all aware, PBOC has been developing a new payment system, the China International Payment System, which is being designed specifically to cover renminbi settlement from different time zones and this could be introduced as early as the beginning of 2014," Zhu says.
Zhu says how the system will interact with existing payment channels and clearing banks is yet to be seen, although the reference to "eligible participants" in it by PBOC implies it will not replace the existing payment systems straightaway.
Zhu says that if London has its own clearing bank, it will make local transactions more efficient and also help to develop the capital market activities in the city.
"It would make more sense to have the swap line if there is a local clearing system in London," Zhu says. "Earlier this year, the chief representative of PBOC in Europe indicated that it would be supportive of London having its own clearing bank if that's what London needs."
"International and Chinese banks have been eyeing opportunities and movements across the continent in this regard, and working behind the scenes to win the support of Beijing in circumstances where a yuan clearing bank in London may be appointed."
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