London, eurozone set to benefit from increased RMB trade

LONDON - London and the eurozone look set to benefit in the future from increased trade in yuan, as figures Thursday show yet another monthly increase in its use as a global currency.

On June 19, the London branch of the China Construction Bank (CCB) was named as the clearing bank for offshore yuan transactions in London, and on the same day the Bank of China's (BOC) branch in Frankfurt became the first eurozone financial institution to gain the same status.

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Figures released Thursday for May show that both financial centers look likely to benefit from a global trend that sees the yuan increasingly used as a currency for international payment.

SWIFT yuan tracker showed that in May 1.47 percent of global payments were in yuan, a tiny amount compared to the global total but up from 1.43 percent in April and a performance that bucked the May trend which saw all currencies decrease 0.7 percent in value of trade.

The increasing take-up of the yuan as an international currency is underlined in the year-on-year figures -- in May 2013, 0.63 percent of customer initiated and institutional payments was in yuan, less than half the 1.47 percent now.

The establishment of yuan clearing banks in London and Frankfurt is likely to further boost the take-up of the yuan.

Astrid Thorsen, market manager at SWIFT, told Xinhua, "You can expect that the different financial institutions that currently have accounts with Hong Kong have to follow the rules and the different timezones and so on, may want to prefer to set up new accounts now with the two clearing banks that are re-located in the region."

There are clear and obvious benefits to the establishment of yuan clearing banks. Thorsen said the two new locations put banks and customers closer together allowing greater understanding of needs.

"Banks will be better able to adapt their offering and provide timely response to their corporate customers. That is really getting closer to the market," she said.