UK nears yuan swap deal as London eyes offshore leader status
By Olesya Dmitracova and William Schomberg
LONDON (Reuters) - Britain said on Friday it hopes to set up a currency swap line with China soon to help finance trade, a move that will enhance London's drive to become a leading offshore centre for yuan trade.
China, in an effort to internationalize the yuan and eventually make it a world reserve currency, has already agreed swap lines with more than 15 other countries, mostly emerging markets.
The Bank of England said on Friday it would work with China's central bank to sign a final agreement shortly on a reciprocal three-year yuan-sterling swap, building on its statement last month that it was ready "in principle" to adopt the swap line.
Britain, always anxious to bolster London's status as Europe's biggest financial centre, launched an offshore yuan currency and bond market to great fanfare last year.
A swap deal would cement its role as the leading centre in the Group of Seven industrialized nations for offshore trade in the yuan - also known as the renminbi - helping it to see off potential rival yuan centers such as Frankfurt, Paris and New York, market watchers say.
"We have already seen evidence in 2013 of a significant increase in renminbi trade in London, and today's announcement supports Britain's ambition to build a thriving renminbi market in London," British finance minister George Osborne said on Friday.
Figures from global transaction services organization SWIFT show that Britain is the leading centre for offshore yuan trade outside Asia and has made far more progress in getting companies to invoice in yuan than the United States, for example.