Shanghai (CNS) -- The Chinese government confirmed London as one of the RMB offshore trading centers last week, reported British and Hong Kong media. Analysts at foreign banks hold the view that Hong Kong is unrivaled in its role as the biggest RMB offshore center. Singapore is competing with London and other international financial metropolises as the number two RMB offshore center.
Woon Khien Chia, marketing director at the RBS , told CNS that the two essential criteria of an RMB offshore trading center are direct arrangement for settlement between the center and the People's Bank of China (PBC), and an RMB exchange arrangement offered by the PBC to the central bank of the offshore center.
Hong Kong is the only international financial center owning offshore RMB clearing banks and sharing sovereignty with the Chinese mainland. No doubt it will continue serving as the core RMB offshore center, pointed out Xie Dongming, analyst at the Oversea-Chinese Banking Corporation based in Singapore.
Xie also stated his opinion that Singapore prevails over other international financial centers to take over the second seat.
As the only international financial center in the ASEAN, the RMB services in Singapore cover the entire ASEAN population of over 500 million, with high credibility. Moreover, as the second largest Asian foreign exchange transaction center after Tokyo, as well as having an influential global private bank, assets management, and a staple commodity exchange center, Singapore possesses mature foreign exchange experiences and talent resources. This is exactly its advantage in becoming an RMB offshore center and in return expanding RMB trades to the international arena, Xie further explained.
In fact, as early as July 2009, when the pilot plan for the Chinese yuan cross-border trade settlement service was launched, Singapore has been taking positive measures in RMB offshore market development and has become one of the first groups of countries completing RMB cross-border trade settlement in a month.
"Before China announced Singapore's position in the RMB offshore market, it was only an attachment to the Hong Kong RMB offshore market. Once China made it public, Singapore now cooperates rather than competes with Hong Kong in this market," added Xie.
London has its leading advantages as well. The availability of RMB trade in London promises the feasibility in all international financial centers within 24 hours, noted Woon Khien Chia.
