London is not competing with Hong Kong in developing a yuan trading centre, a top executive at the City of London Corp said yesterday during a tour to promote the British city's role as a Western hub for the Chinese currency.
'It's not a race with Hong Kong to develop an RMB business centre,' Mark Boleat, chairman of policy and resources at the corporation, said.
During his seven-day visit, the executive is scheduled to meet Chinese officials and European firms in mainland China to discuss developments in yuan trading, underscoring the huge interest from financial institutions in opportunities emerging from the internalisation of the currency. Corporation members include Bank of China, Barclays, Deutsche Bank, HSBC, JPMorgan, Royal Bank of Scotland and Standard Chartered Bank.
Boleat said London, as the world's largest foreign exchange hub, was well positioned to develop the offshore centre but the biggest challenge would be liquidity. Last year, London's spot foreign exchange market's daily volume contributed 26 per cent of the global offshore yuan spot market volume, reaching US$680 million compared with Hong Kong's US$1.5 billion.
'We have to get enough liquidity to get it work,' he said.
Boleat said the corporation was working on solving technical problems and educating potential clients in order to 'build up a pool of RMB liquidity'.
London's yuan deposits reached 109 billion yuan (HK$133.79 billion) by April, according to data from the City of London. Hong Kong's deposits were about 538 billion yuan at the end of the same month.
