People’s Daily recently reported that China’s second largest bank, the China Construction Bank (CCB), has been authorized to be the official settlement bank for the Chinese currency (RMB) in London. This move improved the competitiveness of Great Britain as one of the main offshore exchange centers for the RMB and fixed a financial infrastructure issue in Britain. It is unusual that CCB’s strongest competitor, the Bank of China, did not obtain this authorization. London has been working hard to defend its role as the primary RMB exchange center outside Asia. London is facing tough competition from Frankfurt and Luxembourg. This new settlement arrangement could reduce the risks for those who tend to use RMB as a payment method outside China. It may also ease the process for Chinese companies planning to invest in Europe.
Source: People’s Daily, June 13, 2014