New working group formed to push trading, clearing of China's currency in the US

A photo illustration shows a $100 banknote placed above Chinese 100 yuan banknotes in Beijing in this May 10, 2013 file photo. [Photo/Agencies]

NEW YORK - A working group on renminbi trading and clearing was set up in the New York City on Monday with former NYC mayor and business tycoon Michael Bloomberg serving as the chair of the group.

The group said enabling renminbi-denominated transactions to be cleared in the United States will sharpen the competitiveness of US companies by lowering transaction costs, and bring about direct benefits to the US economy.

The move is one of the results of Chinese President Xi Jinping's state visit to the United States in September when both Xi and President Barack Obama agreed to further deepen financial cooperation between the two countries.

"President Obama and President Xi came to an important agreement that will greatly benefit both the United States and China, and it's now incumbent on US industry to follow their lead," said Bloomberg.

The formation of The Working Group on US RMB Trading and Clearing follows that agreement, with the objective of charting a framework and roadmap that will make it easier for US institutions to make or receive renminbi payments, subject to review by US authorities, thereby lowering their transactional costs, increasing their efficiency and helping them build stronger trade and business partnerships -- which in turn will create more jobs and lead to further US economic growth.

The group will initially include the following member institutions: The US Chamber of Commerce, Bank of America, BNY Mellon, Citi, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Wells Fargo, Agricultural Bank of China, Bank of China, Bank of Communications, China Construction Bank, Industrial and Commercial Bank of China, Additional firms are expected to join the group in the near future.

Tom Donohue, president and CEO of the US Chamber of Commerce, said, "Creating a Chinese currency trading mechanism in the US makes it easier for American businesses to sell goods in China and will help the yuan evolve into a free floating currency."

Tian Guoli, Bank of China's chairman of the Board of Directors said, "We are pleased to join the working group as an initial member, and work with business leaders from China and the US to advance a mechanism to trade and clear renminbi in the US".

Also on Monday, the International Monetary Fund (IMF) said that China's renminbi is eligible for joining the Special Drawing Rights (SDR) basket as an international reserve currency.

The decision marked a milestone in the internationalization of the renminbi. The inclusion of the renminbi will take effect Oct 1, 2016, the IMF said in a press release.