China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

Continue Reading

Capital Markets

Mnuchin expected to be Trump’s Treasury secretary

Donald Trump has chosen Steven Mnuchin as his Treasury secretary, US media outlets reported on Tuesday, positioning the former Goldman Sachs banker to be the latest Wall Street veteran to receive a top administration post. Mr Mnuchin chairs both Dune Capital Management and Dune Entertainment Partners and has been a longtime business associate of Mr […]

Continue Reading


Financial system more vulnerable after Trump victory, says BoE

The US election outcome has “reinforced existing vulnerabilities” in the financial system, the Bank of England has warned, adding that the outlook for financial stability in the UK remains challenging. The BoE said on Wednesday that vulnerabilities that were already considered “elevated” have worsened since its last report on financial stability in July, in the […]

Continue Reading


China stock market unfazed by falling renminbi

China’s renminbi slump has companies and individuals alike scrambling to move capital overseas, but it has not damped the enthusiasm of China’s equity investors. The Shanghai Composite, which tracks stocks on the mainland’s biggest exchange, has been gradually rising since May. That is the opposite of what happened in August 2015 after China’s surprise renminbi […]

Continue Reading


Hard-hit online lender CAN Capital makes executive changes

The biggest online lender to small businesses in the US has pulled down the shutters and put its top managers on a leave of absence, in the latest blow to an industry grappling with mounting fears over credit quality. Atlanta-based CAN Capital said on Tuesday that it had replaced a trio of senior executives, after […]

Continue Reading

Categorized | Currencies

China designates Rmb clearing bank in NY

Posted on September 21, 2016

New Chinese 100-Yuan Banknotes As New Design Goes Into Circulation...The image of former Chinese leader Mao Zedong is displayed on a one-hundred yuan banknote in an arranged photograph at the Bank of China Hong Kong Ltd. headquarters in Hong Kong, China, on Thursday, Nov. 12, 2015. The People's Bank of China's 2015 edition of the 100 renminbi banknote, with new anti-counterfeiting features, starts circulating today. Photographer: Xaume Olleros/Bloomberg©Bloomberg

China’s central bank has designated an official renminbi clearing and settlement bank for New York City, filling in the final major gap in a network of offshore institutions designed to promote greater international use of the Chinese currency.

The People’s Bank of China chose the New York City branch of Bank of China as the official clearing bank, the PBoC said on Tuesday. The designation adds to a roster of Chinese state-owned banks that serve the same function in Hong Kong, London, Singapore, Frankfurt, Paris, Johannesburg and Sydney, among other locations. 

    Bank of China’s New York branch is the largest Chinese branch of a foreign bank in the US with more than $50bn in assets and settlements of international payments equivalent to a quarter of all US-China trade, Bank of China said on its website. 

    Following a meeting with US President Barack Obama on Monday, Chinese Premier Li Keqiang met with leaders of the Working Group for US RMB Trading and Clearing at the Waldorf Astoria hotel in New York on Tuesday — now owned by a Chinese insurance conglomerate.

    “The establishment of a clearing bank in the US will promote the growth of renminbi activity in the US and help accommodate an increase in volumes and demand for renminbi products and services,” said Timothy Geithner, former US Treasury secretary and co-chair of the working group. Michael Bloomberg, former New York City mayor, co-chairs the group, along with Henry Paulson, another former US Treasury secretary.

    Designated renminbi clearing banks facilitate offshore renminbi trading and cross-border payments because they have special access to China’s onshore foreign exchange market, enabling them to provide liquidity to offshore centres. 

    So far, only offshore branches of Chinese banks have received the PBoC’s official clearing bank designation, but Mr Li hinted that could change. 

    “We also welcome those foreign (non-Chinese) banks in New York that meet the eligibility requirements to become clearing banks for Chinese renminbi business,” Mr Li said at a business dinner on Tuesday evening.

    The lack of a renminbi clearing mechanism in the US, a centre of global finance, was a major missing piece of the puzzle for renminbi internationalisation

    – Ming Ming, head of fixed income research at Citic Securities

    The pace of renminbi internationalisation has slowed over the past year as the currency suffered depreciation amid capital outflows from China. Renminbi deposits in Hong Kong, the leading offshore centre, hit a three-year low in July. The redback also dropped below the Canadian dollar to sixth place in a global ranking of currencies used for cross-border payments in the first half of 2016. 

    Market participants say the backsliding highlights the extent to which foreigners’ apparent enthusiasm for holding renminbi in recent years was driven by appreciation expectations, which have since reversed.

    In the long term, however, analysts say the designation of a New York clearing bank is crucial to promoting greater international renminbi usage. 

    “The lack of a renminbi clearing mechanism in the US, a centre of global finance, was a major missing piece of the puzzle for renminbi internationalisation. The designation of Bank of China in New York means the global framework is now basically complete,” said Ming Ming, head of fixed income research at Citic Securities, who previously worked on renminbi internationalisation at the PBoC.

    Twitter; @gabewildau