London has the edge as renminbi hub

So far, European companies have been less enthusiastic about holding deposits in renminbi. Yet, because the Chinese currency is fully exchangeable among offshore centers, the lack of a large renminbi deposit base has not prevented London from developing into a leading renminbi hub.

Nor has London been fazed by rising competition from up-and-coming offshore centers like Frankfurt, Paris and Luxembourg. It now accounts for 57 percent of all renminbi-denominated SWIFT payments between Europe and the Chinese mainland/Hong Kong - a significant share which hasn't changed much in the past year.

In fact, current renminbi flows seem to favor larger centers, giving London a clear advantage in Europe. More than 80 percent of renminbi-denominated SWIFT flows globally are concentrated in the top five offshore renminbi centers, suggesting a significant pooling effect.

The appointment (this week) of China Construction Bank as London's renminbi clearing bank will complement what London has already achieved. But the real driver for London as a renminbi hub will be genuine demand for the Chinese currency, as businesses strengthen their trade and investment links with China.

China is already the world's largest trading nation with an 11.5 percent share of exports. We expect China's trade to double in size by 2020. And as China's trade grows, so will the importance of the renminbi as a global invoicing currency, affecting enterprises everywhere, including in the UK.

From the world's seventh most used currency for payments (up from 13th last year), the renminbi is predicted to become the fourth by 2020 - after the dollar, the euro and the pound. By then, renminbi invoicing will account for close to 30 percent of China's total trade.

Against this backdrop, to retain its status as Europe's leading renminbi hub, London needs to keep investing in its financial infrastructure, training renminbi specialists, building bridges with China and other renminbi offshore centers around the world, and bringing new renminbi users on board.

The writer is deputy group chief executive of Standard Chartered.