Currently Hong Kong and London private enterprises are increasingly looking for ways to trade and invest in CNH. Recently the Hong Kong Monetary Authority announced it will extend the hours of Rmb payment system until 17:30 UK time, giving London and other European cities more time to trade Rmb payments with Hong Kong.
Lilach Nachum, a professor of international business at City University New York, who has also been consulting international firms and senior executives around the world for two decades, told Asia Outbound that the extended hours will boost trade volume, but will not be major step towards internationalizing the Rmb /p>
xtending the hours of trading in Hong-Kong will prolong the time overlap and is likely to increase the volume of trading. It will also provide greater access and exposure to the US dollar, which is traded heavily in London, more than in NY. However, I do not expect this change to be a significant step in internationalizing the Rmb. For this to happen, China will have to further liberalize the Rmb, to a far greater extent than it has done so far, said Nachum.
The most recent figures from the City of London Corporation, the municipal government for the City of London, reveled that CNH deposits in London hit $17.26bn at the end of February.
There are still three measures that the Chinese government must take to make new Rmb offshore hubs into long-time, permanent projects, rather than experiments. Green argued that China needs an independent central bank, that liberalizes its markets and currency that adds more liquid capital to the market.
The Chinese Regulatory Commission( CBRC), has already taken >noteworthy steps in promoting offshore trades by establishing the China International Payment System for CNY clearing systems. This system allows offshore banks to connect with domestic banks. But there are still major steps that need to be taken before the financial system is open to the international market.
Alicia Garcia-Herrero, the Chief Economist for Emergint Markets for BBVA Research agrees that the Chinese government must make many more changes before the Rmb is taken seriously on the international market.
ome of the suggested measures have already been in the pipeline. But the pace of implementing these measures hinges on the authorities assessment of the macroeconomic environment as well as their capacity of risk management. In this context, the increase of relevant quotas and limits seems as a more easily achievable goal in the very short term, said Garcia-Herero.
