China is poised to set up a currency swap agreement with the world's largest foreign exchange market in London as the yuan is expected to become the most commonly traded currency in the next decade, a senior executive of JP Morgan said in Beijing yesterday. "London is likely to become a hub for yuan business in Europe after Hong Kong. As the capital city of the United Kingdom, it is a leading financial centre as well as the world's largest foreign exchange market," Fang Fang, a vice-chairman of Asian investment banking, told the South China Morning Post . Fang was in Beijing to attend the annual meetings of the National People's Congress and the Chinese People's Political Consultative Conference. London is likely to become a hub for yuan business in Europe after Hong Kong He said a yuan-sterling swap agreement would be an important step in spurring offshore yuan trade and investment activities in Europe, China's largest trading partner. Fang said he expected the City of London to be appointed as the next authorised offshore yuan clearing centre after Hong Kong, Taiwan and Singapore after the People's Bank of China and Bank of England sealed the currency swap agreement. The two central banks have begun talks on the potential establishment of yuan-sterling swaps, which should offer stability and liquidity for the yuan in the offshore market. The Bank of England said last month it would discuss establishing a reciprocal three-year yuan-sterling swap in line with the People's Bank of China to finance bilateral trade and investment. Fang said Hong Kong would remain a key offshore market for trading yuan but would need to offer new products to meet a rapidly growing demand for trade and investment products. This demand is expected to increase once quotas are issued for the pilot scheme that allows foreign institutional investors to invest offshore yuan in mainland capital markets. Fang said Hong Kong needed to develop more advanced trading platforms in global currency markets - which have a daily turnover of US$5 trillion - as foreign investors only received the yuan through trade channels. Yang Kaisheng, the president of the Industrial and Commercial Bank of China, the largest state-owned lender by market value, said ICBC aimed to become the clearing bank for offshore yuan business in London. China has launched a bold plan to internationalise the yuan, which will see the increasing use of the currency to settle trade and in investments outside the country. More importantly, it implies that more foreign central banks will hold yuan. Fang said subsidised public housing was among the issues at the top of his agenda at the CPPCC meeting, as the country was undergoing a massive urbanisation scheme.