Britain has temporarily shelved Bank of China's ambitions to be the clearing bank for the yuan in London as it feels there's no need for the service currently but will designate a bank if there is a demand for it.
Mark Boleat, chairman of the City of London Policy and Resources Committee, told local media during his visit to Shanghai last week that London doesn't need a yuan clearing bank for now, but it will not hesitate to designate one in future if the market demands for such a bank.
"There's a strong link between banks in London and Hong Kong in clearing and settlement businesses," Boleat said. "Hong Kong's clearing service can fully meet the needs of London. Besides, banks in London can make direct clearing with the Chinese central bank if the China International Payment System is set up next year."
The CIPS aims to make cross-border settlement in yuan more efficient and to further boost the global profile of the currency.
Qiu Yi, deputy president of BOC, who visited Boleat in London last month said the bank is willing to assist the British and Chinese governments to promote the use of currency swaps in bilateral trade between the two countries. BOC also wants to be an important partner in building the offshore yuan center in London, and become the designated yuan clearing bank, according to a newsletter of BOC's London branch.
BOC, the nation's biggest foreign exchange bank, is the clearing bank for the yuan in Hong Kong, Macau and Taiwan. The Industrial and Commercial Bank of China, the nation's biggest bank, is the clearing bank for the currency in Singapore.
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