The UK-China currency swap

By Tim Collard
0 Comment(s)Print E-mail China.org.cn, February 28, 2013
Adjust font size:

Bank of England [File photo]

Bank of England [File photo] 

Amid the encircling gloom caused by the withdrawal of the U.K.'s triple-A credit rating, there has been one perceptible gleam of light: news that Bank of England (BoE) Governor Sir Mervyn King is negotiating the opening of a currency swap facility with the People's Bank of China (PBoC). And it can be presumed that the deal will go ahead; I don't think Sir Mervyn would have risked a massive loss of face by announcing his intentions without a fair degree of confidence that it will actually happen.

This would, of course, not be a unique event: China already has at least twenty currency swap agreements in place. But this is the first one with a major global trading partner. It will be an important milestone in the steady progress towards full Chinese participation in the international currency system and the emergence of the RMB as a world reserve currency. For some time now, no one has doubted that this must and will happen, as the lack of full convertibility for the yuan remains a solid obstacle to the long-awaited full integration of China in world markets. And most sensible people have sympathy for China's extremely cautious approach to issues concerning her currency; the benefits of the slowly-slowly policy were easily seen in the great financial crises of 2007-2008, which China was largely able to avoid. But, however slowly, progress must be made, and it is good to see concrete signs of it.

And this deal is quite a coup for Britain. For some years we have been in fierce competition with our European rivals (sorry, I mean partners) in our efforts to defend London's position as the European hub of financial markets, and the establishment of London as a steady source of renminbi finance will do much to offset the blow dealt by the downgrading of our sovereign credit. And, dare I say it, Britain has once more become a beneficiary of the euro on international markets.

And we don't often get to put one over on the Americans. This is one more example of the advantages of quiet constructive negotiation over megaphone diplomacy. In the strident atmosphere of the recent U.S. election campaign there were several raised fists and raised voices over China's currency management, with governor Romney threatening to declare a state of diplomatic hostility with China in an effort to force yuan revaluation. That isn't the way to do it. There is a Chinese saying: "We must ford the river by feeling for the stones," and a series of currency swap deals, which will gradually form a network sufficiently broad-based to circumvent most serious obstacles, is a more sensible way forward than expecting a comprehensive deal at one fell swoop.

This has been a studied and well-prepared British policy. In April 2012 the U.K. government opened up a facility in London to establish an offshore currency and bond trading market involving the Chinese currency. China Construction Bank has already issued a renminbi-denominated bond in the London market. The currency swap deal is the logical next step. I personally feel that U.K. dominance of international currency trading is a slightly mixed blessing, but it is one major advantage we have, so we might as well make the best of it. We will be happy to share the international renminbi trade with Hong Kong, to whom we are now second in the world in this area; the U.K.-China-Hong Kong nexus has a solid historical basis.

As I said above, it is easy to understand why China has been watchful and cautious in removing the restrictions on currency convertibility, which have been salutary on some recent occasions; but it is also easy to see that a currency policy originally modelled on those of the Soviet Union cannot possibly be appropriate for the twenty-first century. After all, Soviet bloc currencies had to be strongly protected because, in the outside world's terms, they were virtually worthless; it was forbidden to hold Soviet-bloc currencies outside the Soviet bloc, but then whoever would have wanted to? This is very far from being the case with the renminbi. But, whether a currency is wanted by everybody or wanted by nobody, adjustments still require careful handling.

But I am very glad to see that the Sino-British agreement is likely to alleviate the difficulties in currency conversion which have persistently complicated the integration of the newly resurgent PRC in the networks of international trade. This is a deal where both sides win: Britain hosts the business, and China can trade in her own currency with a greatly reduced risk of trading partners being deterred by fears over liquidity. Well done PBoC and BoE!

The author is a columnist with China.org.cn. For more information please visit: http://www.ccgp-fushun.com/opinion/timcollard.htm

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.

 

Print E-mail Bookmark and Share

Go to Forum >>0 Comment(s)

No comments.

Add your comments...

  • User Name Required
  • Your Comment
  • Enter the words you see:   
    Racist, abusive and off-topic comments may be removed by the moderator.
Send your storiesGet more from China.org.cnMobileRSSNewsletter
主站蜘蛛池模板: 日本xxxx高清在线观看免费| 欧美最猛性xxxxx免费| 性xxxxfreexxxxx喷水欧美| 九位美女尿撒尿11分钟| 精品欧美一区二区三区精品久久| 国产精品亚洲欧美大片在线看| 中文字幕乱码人妻无码久久| 欧美性色xo影院在线观看| 另类视频第一页| jizzjizz中国护士第一次| 成人免费ā片在线观看| 亚洲人av高清无码| 欧美精品hdvideosex| 可以免费观看的毛片| 被夫上司强迫的女人在线中文| 国产精品蜜芽在线观看| 一道本不卡免费视频| 日韩精品欧美国产精品忘忧草| 人妻少妇偷人精品视频| 色综合a怡红院怡红院首页| 国产精品看高国产精品不卡| 一级黄色在线看| 无套进入30p| 久久久久久AV无码免费网站 | 久久成人国产精品免费软件| 波少野结衣色在线| 日韩大片观看网址| 亚洲国产欧美91| 欧美疯狂xxxx乱大交视频| 亚洲色欲久久久综合网东京热| 男生插入女生下面视频| 国产亚洲高清不卡在线观看| 4444亚洲人成无码网在线观看| 在线观看国产精品麻豆| 中文字幕久精品免费视频| 日日婷婷夜日日天干| 久久久国产99久久国产久| 欧美亚洲国产成人高清在线| 人妻少妇精品久久| 男女啪啪漫画无遮挡全彩| 免费看美女扒开腿让男人桶|