ICBC urges Canadian banks to spur volumes at yuan hub
By Fergal Smith
TORONTO (Reuters) - Trading activity in North America's first yuan hub, Toronto, has fallen short of the heightened levels expected at its launch and local banks should be doing more to spur growth, an Industrial and Commercial Bank of China (ICBC) executive said.
The hub was launched more than a year ago to foster increased trade and investment activity with China, already Canada's second-largest trading partner.
Transaction volumes have grown, but not to the "sky high" level expected around the time of its launch, said Min Gao, head of the treasury department at the Canadian arm of ICBC, the hub's official clearing bank.
Gao did not put a figure on what the "sky-high" expectations were, but he confirmed that roughly $5 billion of transactions went through the Canadian hub in its first year, most of which came from the United States, including ICBC's U.S. branch.
Canada's trade with China was $85 billion in 2015, according to the Asia Pacific Foundation of Canada's website.
The hub enables the processing of yuan payments outside of China, increasing accessibility to the currency and avoiding the costs associated with cross-border payments.
However, Toronto faces competition from other renminbi hubs, including Hong Kong, which benefits from a deep pool of liquidity.
Additional liquidity in Toronto would lower costs and better facilitate the development of yuan-denominated financial products, said Gao. Continued...