The renminbi (RMB) is the official name given to the currency in the People's Republic of China (PRC). "Yuan" (¥) is the name for a unit of this currency (officially traded as CNY). It is issued by the People's Bank of China (PBoC), the monetary authority
of the PRC. Remninbi means "the people's currency". It's also known internationally as "the redback".
Trading in Chinese renminbi is expected to grow significantly in the global financial markets. If you believe the advertising, 2013 is likely to be
the 'year of the renminbi'. China has traditionally maintained strict control over its capital flows and whilst this remains the case, it has, since 2002, begun a slow and carefully considered process of relaxing those capital controls. This
process has been accelerating since 2009 and in the last month alone, China has launched Australian dollar direct trading, established a currency swap agreement with Brazil and, following suit, an
agreement is in place for a swap facility with the UK, arranged by the Bank of England (BoE) and the PBoC. Investment banks had asked for the swap line in order to build confidence amongst clients and investors alike as the renminbi continues on its journey
to becoming a fully deliverable international currency.
The latter arrangement has UK government backing and is another step towards making London the main centre for offshore renminbi trading (unofficially termed CNH), globally. This has been led by a City of London
initiative whose members include; the Bank of England, three strategically important Chinese banks and several major global investment banks. The momentum is maintained from Q4 in 2012, when China Construction Bank became the first Chinese bank to issue
yuan-denominated bonds (known as "dim-sums") outside of China and Hong Kong, doing so in London. The
support, the demand and the momentum are all there; with London now overtaking Singapore as the world's no.2 offshore renminbi trading centre (and fast catching up with the 1st place Hong Kong).
So, if 2013 does become the year of the Chinese renminbi...are you ready?