Australia helps China develop international currency

 

THE central banks of Australia and China are working together on potential future clearing and settlement arrangements in Sydney, as Australia helps China to develop its international currency, the renminbi.

One of the most significant outcomes of the recent Australia Open For Business delegation to China, led by Prime Minister Tony Abbott, was the agreement to enhance offshore market development of the renminbi (RMB).

Australia is at the forefront of countries working with China to support international use of the RMB, according to statements made by Federal Treasurer, Joe Hockey.

“Australian banks and their Chinese counterparts have worked hard to promote direct trading of the two currencies,” Mr Hockey said. He said monthly trading volumes had increased more than seven-fold in the past year to US$2.4 billion from US$324 million equivalent before direct trading.

In fact, Mr Hockey said, the Australian dollar had become the fourth most traded currency on China’s Foreign Exchange Trading System and there was significant potential for this market to grow.

“China’s leaders have sent a strong signal of their commitment to a comprehensive program of economic reform. Financial sector reform will be central to achieving this,” Mr Hockey said.

“These reforms will better integrate China into the global economy by breaking down the walls that prevent the free flow of capital to the rest of the world.  It will see China further liberalise its exchange rate and promote the international use of its currency.”

Mr Hockey confirmed that Australia’s Reserve Bank was working with China’s central bank,  the People’s Bank of China, on future clearing and settlement arrangements in Sydney.

“When I travel to China for the Strategic and Economic Dialogue later in the year, I will explore further steps to promote economic and financial cooperation between Australia and China,” Mr Hockey said.

“Australia’s business delegation to the inaugural Australia Week in China demonstrated a high level of interest in the economic relationship between our two countries.  Banks, fund managers, farmers and miners all stand to benefit from Australia's positioning as an offshore RMB centre.

“2014 is a year of opportunity for China and Australia to deepen financial ties.”

www.treasury.gov.au

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