Britain wants London to become a leading centre for off-shore trading in Chinese renminbi to help boost the economy, Chancellor George Osborne said on Wednesday.
Speaking after HSBC launched the first-ever renminbi(or yuan) denominated bond in London, Osborne said the city's pre-eminence in foreign exchange and bond issuance means it is well placed to serve as a hub for Chinese banks that want to do business in the west.
It is the ambition of the British government to make London a western hub for the sector - with all the benefits that this will bring to our own economy, Osborne said in a speech.
Osborne's comments came after HSBC Holdings Plc said it planned to launch a 3-year renminbi (RMB) bond.
This is a significant moment, Osborne said. This builds on the progress London has already made toward becoming the western hub for RMB, he added.
A report by the City of London Corporation published overnight showed that customer and interbank yuan, or renminbi deposits in London total 109 billion yuan.
The city is working with major banks to boost London as an off-shore yuan trading centre, building on an initiative by Britain and Hong Kong to co-operate on off-shore yuan trading.
London represents 26 percent of the global offshore spot foreign exchange market in renminbi.
London and other financial centres such as Singapore are seeking to capitalise on the rapid growth of the off-shore yuan bond market in Hong Kong since its launch less than two years ago, as investors aim to put their yuan deposits to work by buying high-yielding yuan bonds.
Borrowers have included international companies such as e Tesco and McDonalds as well as international banks.
(Reporting by Fiona Shaikh. Editing by Jeremy Gaunt.)