UPDATE 1-Canada has 3-4 years to take advantage of yuan hub -Chinese banker
(Adds clearing function launch date, Bank of Canada limits on swap agreement)
By Randall Palmer
OTTAWA Feb 17 (Reuters) - Canada will have only three or four years to take advantage of its renminbi clearing hub before China liberalizes its capital account and so reduces the competitive advantage the hub creates, a Chinese banker key to the operation said on Tuesday.
During Canadian Prime Minister Stephen Harper's visit to China in November, it was announced that a clearing hub for the yuan, or renminbi, would be established in Toronto, the first such hub in the Americas.
The Canadian subsidiary of the Industrial and Commercial Bank of China Ltd has been designated as the hub's clearing bank, and the president of the Canadian unit, William Zhu, described the time challenge to the House of Commons finance committee on Tuesday.
That challenge is a "quite limited time window for us to implement it because China is liberalizing (its) capital account I guess in the future three or four years," Zhu said.
"So we've only got four years to take advantage of (the) renminbi clearing center to fully utilize our competitive advantages."
Zhu announced a March 23 launching ceremony for the clearing function of the Canadian hub, which will enable companies trading with China to settle transactions in the Chinese currency itself, rather than having to use the U.S. dollar or other currencies as intermediaries.
Speaking to reporters, Zhu urged Canadian banks to develop a full suite of products in renminbi which can serve clients in Canada and outside the country. Continued...