ECB to sign US$130 billion currency swap with China.
Frankfurt, the German financial capital, intends to become a major offshore renminbi trading hub in Europe as the European Central Bank prepares to sign a swap agreement with the People's Bank of China. Frankfurt Main Finance, a financial association that represents major German banks, said the ECB will sign the currency swap with Beijing.
It said some 10% of Sino-German trade is handled in renminbi. If the agreement pushes through, it will dwarf the US$33 billion agreement recently signed by the Bank of England and PBOC, China’s central bank. Frankfurt Main Finance believes that trading risk and hedging costs will fall significantly if the swap agreement is reached, which could lead to significant renminbi savings and could further boost trade between Germany and China.
Frankfurt, which is home to the ECB, is against rivals such as London, Paris and Zurich to win renminbi business for German financial institutions and exporters as China has been keen to lift the global profile of its currency.
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