David Sear, the chief operating officer of Western Union Solutions, a company that facilities international money transfers in different currencies said, e are witnessing a global currency shift that will profoundly influence how international business is conducted. This is the biggest change to international remittances since the arrival of the euro.
This is, perhaps, the largest step the Chinese government has made in increasing the use of the yuan. The government has taken other steps to encourage the use of the renminbi, such as establishing currency swaps with more than 14 countries in regions, and making Hong Kong, Singapore, and now London, into renminbi offshore centres.
The announcement will save many European companies a great deal of money in the long term. They will now able to trade directly with Chinese companies by using the renminbi, instead of converting to the dollar, forcing companies to pay an extra currency conversation fee. Sear said, he new deal will help British SMEs bypass the need to pay in U.S. dollars when trading with the world second largest economy. Paying in renminbi would help U.K. businesses save money and increase the speed, transparency, and efficiency of their payments to and from China.
Although the announcement has excited many Chinese companies, some Chinese business owners still believe they may not be able to find many foreign companies who are interested in solely using the renminbi. There are reports that some Chinese exporting and importing companies are finding it hard to find foreign counterparts because the Chinese People Bank of China still heavily regulates the currency.
But Sear does not buy it, and he thinks that it is now just as easy to settle in the renminbi as it is in the U.S. dollar. A Western Union Business Solution survey indicated that 42 percent of Chinese companies who would prefer payments in renminbi have never even asked their partners if they would consider settling in the currency because they believe it is too difficult and inconvenient to do so.
Sear believes that the Chinese government needs to educate other people about how easy it is now to trade using the yuan. ncreasing awareness of how easy it is to buy and sell using renminbi and the commercial advantages it brings means attitudes will change. According to Sear and many other observers and scholars, the Chinese regulators are now truly beginning to take noteworthy steps in internationalizing the renminbi and transforming it into a worldwide currency.
