The Chinese yuan now is the world’s fourth most common payment currency. To facilitate massive volumes of cross-border transactions in an export-driven economy, China has established offshore worldwide centers authorized to freely trade remnibi. “This strategic move demonstrates the clear commitment by the Chinese authorities to grow the offshore bond market and the confidence in the City of London as a leading renminbi hub for future activities”, he said.
Advertisement
The listing is the first worldwide Green Bond issue by a Chinese bank, as well as the first Green RMB bond for ABC and listed on London Stock Exchange.
Last month, following a meeting between US President Barack Obama and Chinese President Xi Jinping in Washington, the U.S. confirmed that it “supports China’s commitment to implement further financial and capital market reforms, and accordingly the United States reiterates its support for the inclusion of the [Renminbi] in the SDR basket provided the currency meets the IMF’s existing criteria in its SDR review”.
Central bankers in emerging markets around the world are struggling to stem the surge of funds leaving their countries. The index will be run by the bank’s Shanghai RMB trading unit.
The People’s Bank of China scaled back cash injections in its open-market operations for the second week in a row, choosing instead to top up the banking system with longer-term funds.
“This is another important step in yuan internationalization, which could help increase chances to win reserve status”, he said. Braddick chairs the London Hong Kong RMB Forum and is Britain’s member of the EU’s Financial Services Committee.
This policy dilemma might explain why the U.S. Treasury went softer on Beijing over its foreign exchange rate policy in its latest semi-annual report to Congress, which offers an assessment of the economic and currency policies of America’s major trade partners.
The Treasury report said that China intervened heavily in currency markets in July, August and September, spending $230 billion to prevent the yuan from depreciating.
The green bond is the first of its kind issued by a China-based financial institution. One is to keep a good domestic economy growth rate, because the RMB is likely to attract many global investors after it becomes more widely used, she said.
Advertisement
“It gives China the opportunity to test the certain market development in a defined designated space, and take the learning from the experiment that takes place within a distinct area and take those that have worked well and extend them to the rest of country”, he said.
