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HSBC

Bank on convertibility

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The mainland has accelerated steps to making the yuan a global currency, and the United States Federal Reserve's decision to allow Chinese banks to expand their operations in the US will give further impetus to it.

Last month, HSBC said it would issue the first international yuan-denominated bond in London, which currency experts say signals an important stage in the mainland currency's journey towards full convertibility.

HSBC announced that it planned to sell 2 billion yuan (US$317 million) of yuan-denominated bonds in London with a yield of 3 per cent, the first-ever international yuan-denominated bonds to be sold outside the mainland's sovereign territories.

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The move coincided with British Chancellor of the Exchequer George Osborne speaking of his country's ambition to boost London as an offshore trading centre for the yuan.

The Federal Reserve revealed that three of the mainland's largest state-owned banks, Bank of China, the Agricultural Bank of China and ICBC, have been given approval to expand their operations in the US.

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In a research report, ING Bank says that from pilot schemes for inward and outward foreign direct (FDI) investment, and the expansion of China's Qualified Foreign Institutional Investor (QFII) scheme, it sees the mainland taking further positive steps to open up the market and achieve yuan convertibility.

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