Shanghai yuan role 'no threat' to London
The free-trade zone will increase transaction volumes in offshore yuan hubs such as the UK capital, lord mayor of the city's finance district says
The experiment in full yuan convertibility through the new free-trade zone in Shanghai will boost transaction volumes in offshore foreign exchange centres like London and Hong Kong that have been accumulating yuan deposits, not render them redundant, according to the lord mayor of the City of London.
Roger Gifford, visiting Hong Kong to promote London's competitiveness in global finance, said anything that made the yuan easier to trade would benefit existing offshore deposit centres.
"I do not consider Shanghai's new free-trade zone experiment a threat to London, Hong Kong or any other city," he said. "The more centres to trade the yuan, the bigger the global pie of the yuan business. The experiment in Shanghai will help boost international investors' interest in trading the currency and benefit all offshore yuan trading centres."
The decision to allow Shanghai a freer yuan flow has led some analysts to warn the end may be nigh for Hong Kong and other offshore yuan hubs.
Gifford rejects such concerns, saying the experiment in free convertibility shows China is keen to move in the direction of a freely convertible currency in the longer term, which will only boost interest in the yuan.
"China is now the world's second-largest economy. We'll naturally see it become one of the most traded currencies worldwide. How far the yuan trading can go will depend on the speed of the liberalisation of the currency and what the Chinese authority wants."