German chancellor Angela Merkel meets Bank of China president, Chen Siqing, today to mark the Bank of China’s appointment as Frankfurt’s offshore renminbi (RMB) clearing bank.
Frankfurt’s establishment as the eurozone’s first offshore clearing hub for RMB trade settlement will be a huge boost to European corporates trading with China, especially those that are mid-sized, according to
, global head of cash management and international business at Commerzbank,
“The establishment of a RMB clearing hub in Frankfurt signifies a real business development -particularly for medium-sized exporting companies, such as machinery producers, which will now be in a position to settle directly in RMB via their local market,” said Wolf
“These companies will be able to eliminate the costly need to route RMB payments via other financial centres, potentially resulting in lower costs when dealing with their Chinese counterparts. What’s more, they will most likely have a time zone advantage, which will speed up the settlement of cash business, and the market will become more transparent with most of the payment chain handled in Germany.
“As such, we expect an increasing number of corporate clients to therefore begin settling and invoicing in RMB – which should provide them a competitive edge when establishing trading partnerships in the Asian region.”
Bank of China was officially appointed as Frankfurt’s offshore RMB clearing bank, having been nominated on 19 June following an agreement signed by the central banks of Germany and China for Frankfurt to become a RMB clearing hub on 28 March.
The Frankfurt hub is expected to further boost Sino-German trade relations. Germany is China’s leading trade partner in Europe and according to the Federal Statistics Office of Germany, aka Destatis, bilateral trade between the two countries reached €140bn last year (US$192bn).
According to the statistics, China is also Germany’s principal trading partner in Asia, and its third most important trading partner worldwide.
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