Clearstream has set out its market approach to developing and delivering solutions to help support the internationalisation of the renminbi (RMB).
It wants to bring together market providers and participants to collectively enable foreign investors to further invest in the Chinese currency, help develop solutions to increase offshore RMB liquidity, enhance the depth and breadth of RMB products and services, and facilitate both growth and maturity in the offshore RMB bond markets.
To deliver on this, Clearstream is actively seeking partners to join in building and implementing the components that will help establish and facilitate an international offshore RMB market.
Clearstream also plans to leverage its international infrastructure to act as a reciprocal gateway between Chinese and non-Chinese investors, and issuers and other market participants.
Since the launch of the offshore RMB programme in 2009 and China’s recent new measures aimed at internationalising its currency, there has been impressive appetite for this growing world currency.
China is the second largest economy in the world with its currency presently standing in 8th place as a world payment currency by value, having risen from 20th place since 2012, according to SWIFT statistics.
But RMB currently accounts for less than 9 percent of global trade finance volume, while the US dollar accounts for more than 81 percent.
To help develop and execute its RMB market approach, Clearstream is working with the trade finance industry, investment funds industry and the global securities financing industry such as collateral management providers.
Simultaneously, Clearstream can facilitate the efficiency and liquidity of the offshore RMB cash market by funding the demand for offshore RMB in one region with supply of offshore RMB from another region, all secured by collateral held on Clearstream’s collateral management platform.
Services and products to be explored include triparty repo solutions for increasing interbank market liquidity in RMB, cash management, bonds issuance and the development of new offshore products and services including in the funds area.
Head of global client relations and executive board member of Clearstream, Philip Brown, said: “A cornerstone of Clearstream's business strategy is to facilitate and support our customers' increasing demand to invest in the Asian markets. The internationalisation of the Renminbi that the Chinese authorities pursue is currently one of the most exciting developments in this space that we, as a core market infrastructure provider, have been supporting since the early days.”
“We have a clear vision and market approach to help take this agenda forward—together with partners from across the market we intend to contribute to the development of a truly international offshore market for the Chinese currency.”
