We use cookies to provide you with a better experience. If you continue to use this site, we'll assume you're happy with this. Alternatively, click here to find out how to manage these cookies

hide cookie message
RSS FeedFinancial Planning

BoE ‘ready in principle’ to set-up Yuan swap line


UK central bank could be first in G7 to ink forex swap agreement with China

Article comments

The Bank of England (BoE) is 'ready in principle' to become the first central bank in the G7 to enter into a foreign exchange swap agreement with China's central bank, Chris Salmon, BoE's executive director for banking services said on Thursday.

Addressing the London Money Market Association's executive committee meeting, Salmon said, "The BoE would welcome the development of the offshore Yuan market just as it would any other legitimate market innovation, and we would not want to inhibit that outcome inadvertently through gaps in our operational framework."

"To remove any residual uncertainty about our attitude: the BoE is ready in principle to agree a swap line with the People's Bank of China (PBOC), assuming a mutually agreeable format can be identified," he added.

Previously UK officials have always maintained that they would not enter into such a deal with China’s central bank as the Yuan was not freely exchangeable.

For its part, China has signed bilateral currency swap deals in the past. However, a tie-up with the Bank of England, if approved, would be a first between the burgeoning Asian economic powerhouse and a G7 central bank.

London launched an offshore Yuan currency and bond market last year. If this were to be followed by a swap deal, the agreement would cement the City’s status as the leading centre for offshore trade in the Chinese currency in Europe.

However, Salmon said the growth of the market will ultimately depend on the success of market participants in matching embryonic demand and supply for Yuan denominated products.

"It’s just as the original Eurodollar market grew by satisfying a latent private sector demand for dollar assets in this time zone. That said there is a perception that market confidence would be boosted if the BoE and the PBOC agreed a swap line," he concluded.

Share:

Recommended Articles

Comments

BoE ‘ready in principle’ to set-up Yuan swap line
Financial Planning

Could CFOs do more to boost shareholder value?

Could CFOs do more to boost shareholder value?

Working capital improvements start to pay off, but more could be donemore ..


Balfour rejects Carillion's "improved" £2bn merger bid

Balfour board says the offer does not address its two main concernsmore ..

Persimmon posts 57% rise in pretax profits

The FTSE100 housebuilder credits Help to Buy with encouraging growthmore ..

Inflation rate eases to 1.6% thanks to generous summer sales

Price drops in clothing and food biggest contributor to fall in inflationmore ..

Can finance rise to the challenge of major transformation?

Outdated finance processes, systems and competencies leave too many questions unansweredmore ..

Budget: What business wants

CFOs are keen for the chancellor to avoid any uncertaintymore ..

Send to a friend

Email this article to a friend or colleague:


PLEASE NOTE: Your name is used only to let the recipient know who sent the story, and in case of transmission error. Both your name and the recipient's name and address will not be used for any other purpose.



In Depth
Can finance rise to the challenge of major transformation?

Can finance rise to the challenge of major transformation?

Outdated finance processes, systems and competencies leave too many questions unanswered more ..

In Depth
Interim CFO or consultant? The pros and cons

Interim CFO or consultant? The pros and cons

Ed Harding offers an insight into the life of an interim CFO and the advantages in driving transformation more ..

Advertisement

* *