VICTORIA - The Province of British Columbia welcomes today's announcement by Prime Minister Stephen Harper that Canada and China have agreed on measures to support the increased use of renminbi (RMB) in trade, commerce and investment between the two countries, Premier Christy Clark announced today.
"Today's agreement will support the stable and healthy development of the renminbi market in Canada, and will help establish Canada as North America's first offshore renminbi hub," Premier Christy Clark said. "Canada's establishment as a renminbi trading hub will enable us to continue expanding our financial and economic ties to one of B.C.'s most important export markets."
A Canadian RMB hub will make the use of renminbi in B.C.-China trade, commerce, and investment easier for Canadian financial institutions and their customers. For B.C. firms doing business in China, using renminbi can be more efficient than using a currency of an unrelated country, typically the US dollar. A Canadian hub can also help expand the range of financial products and services denominated in the Chinese currency, further helping B.C. firms to do business in China.
"The designation of Canada as a renminbi hub will benefit Canadian financial service providers in all financial centres of Canada," finance minister Michael de Jong said. "B.C.'s financial sector in particular stands to benefit, with our strong trade, financial, social, and cultural ties to China and the Asia Pacific."
The agreement between Canada and China provides for the following measures:
- Establishing a reciprocal swap line between the Bank of Canada and the PBOC to provide liquidity in renminbi for financial institutions;
- Designating a Chinese clearing bank at a later date for settling exchange of renminbi in Canada; and,
- Granting an initial Renminbi Qualified Foreign Institutional Investment (RQFII) quota for Canadian institutions to invest in Chinese bonds and equities.
British Columbia has been collaborating with the Government of Ontario, AdvantageBC, the Toronto Financial Services Alliance (TFSA) and the financial services industry to promote the establishment of a Canadian renminbi trading hub since early 2014.
In 2013, B.C. was the first foreign government to issue a bond in the renminbi market. In October 2014, B.C. issued a further bond - this time a two-year bond - into the renminbi market, raising RMB 3 billion (approximately C$559 million).
Federal government backgrounder:
Increasing Renminbi Trade, Commerce and Investment between Canada and China http://pm.gc.ca/eng/news/2014/11/08/increasing-renminbi-trade-commerce-and-investment-between-canada-and-china#sthash.9INssPeU.dpuf
Ministry of Finance