Cross-border yuan deals surge for BOC

Cross-border yuan settlements by the Bank of China Ltd increased more than 50 percent year-on-year during the first nine months of 2013, faster than the nation's 7.7 percent trade growth, according to the bank's Cross-border RMB Index released on Thursday.

The bank developed the CRI to reflect the use of the currency in cross-border and overseas transactions. The index has three inputs: yuan outflows, transactions overseas and yuan inflows.

The bank's cross-border yuan settlements reached 2.67 trillion yuan ($438 billion) from January to September, up 56 percent year-on-year and more than the full-year value for 2012.

"Cross-border yuan settlement has become an increasingly important part of the bank's international business portfolio," Vice-President Chen Siqing said during a news conference. "We continue to take the lead in cross-border yuan settlement among domestic banks."

BOC's cross-border yuan settlements account for about one-third of the market. The bank has settled 7.2 trillion yuan in cross-border transactions since the pilot program was launched in 2009, the largest settlement value among domestic participants.

The China (Shanghai) Pilot Free Trade Zone is expected to become another important yuan offshore market, said Chen. BOC has formulated plans to promote cross-border yuan settlement in the FTZ, although those plans haven't yet been announced, he added.

BOC's branch in Hong Kong, which is home to the biggest offshore yuan market, recorded 36 percent growth in its cross-border yuan settlements in the first three quarters to 2.6 trillion yuan.

Daily transactions involving offshore yuan settlements in the foreign exchange market stand at the equivalent of $10 billion, said Yang Ruhai, head of yuan transactions at the Hong Kong office of BOC.

"We have recently visited many countries and regions to promote cross-border and offshore yuan settlement. We were pleased that the scale of yuan settlements overseas has been increasing as Chinese companies make more investments abroad," said Yang. "Apart from the Asia-Pacific, clients in Europe, the United States and the Middle East are showing more interest in doing business using the yuan."

Cross-border yuan settlement by BOC's London branch stood at 60 billion yuan in the first nine months, up 50 percent.

"China agreed to grant 80 billion yuan in [renminbi qualified foreign institutional investor quotas] to the UK during the visit to China by Chancellor of the Exchequer George Osborne last month," said Fang Wenjian, manager of BOC's branch in London.

"We believe that cooperation like this will facilitate the environment for offshore renminbi settlements in London."

During the Renminbi World Conference held this week in Beijing by the publishing firm Asian Banker, Wei Jianguo, ex-minister of commerce of China, offered several suggestions for speeding up the yuan's internationalization.

"We should elevate the yuan's profile in the international market in a multifaceted manner," said Wei, "including yuan settlement in China's foreign aid to other countries, in fairs and bazaars at border regions with neighboring countries, and by setting up eight to 10 yuan offshore centers similar to Hong Kong."