Luxembourg for Finance, a public-private partnership between the Luxembourg government and the Luxembourg Financial Industry Federation responsible for the promotion of the financial centre, organized a financial mission to Singapore, Kuala Lumpur and Shanghai between 17 and 21 October. The mission was led by Mr Luc Frieden, Minister of Finance and Chairman of Luxembourg for Finance.
He was also quoted as saying, "The whole world is interested in investing in China, and if we can become an offshore yuan market like Hong Kong, the financial exchange between Luxembourg and China will be greatly boosted."
Bank of China (BOC) and the Commercial Bank of China (ICBC) have already established operations in Luxembourg, offering yuan account services, while three fund management companies have registered funds in Luxembourg according to Saluzzi. He also said he expects the sector to grow rapidly over the next five to 10 years. According to the country Minister of Economy and Foreign Trade Jeannot Krecke, three banks have shown interest in beginning activity in Luxembourg.
Fund providers in Luxembourg are beginning to offer RMB domiciled funds, in response to increased demand for the product; including Allianz Global Investors and more recently Blackrock Global funds which invests at least 70 percent of its entire assets in yuan.
In the same China Daily article, researcher Francois Guilloux of Z-Ben Advisors described the sheer potential of the Chinese market, saying "China will surely add more channels for yuan-backed investment." and there would be over 1 trillion yuan in offshore markets by the end of the next quarter. A sum of 700 billion yuan has amassed in the offshore yuan market, predominantly in Hong Kong, while yuan-denominated bonds worth merely 140 billion yuan have been issued.
Mr. Saluzzi said, in an interview with Luxembourg for Finance, that the expedition was ery positive. Noting the effect of restricted convertibility of the yuan, he said hile Shanghai is a financial centre serving primarily the domestic market, it works on a currency that is not convertible today and therefore limits its ambitions abroad.
