Switzerland, China agree swap boosting role of yuan

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The Swiss and Chinese central banks signed a currency swap agreement in Beijing on Monday (July 21), marking an important step in the development of a market for yuan in Switzerland, the Swiss central bank BNS said.

The agreement, highlighting steps towards international use of the yuan, ensures that Swiss francs will be available in China and that yuan, also known as renminbi, will be supplied to financial centres in Switzerland.

The BNS statement said that the agreement was “an important step” for the renminbi business in Switzerland. The agreement permits the two central banks to buy up to a maximum of 150 billion yuan or 21 billion Swiss francs (17.3 billion euros, US$23.4 billion, S$29.9 billion). The deal was signed by the governor of the People’s Bank of China Zhou Xiaochuan and BNS president Thomas Jordan.

The BNS also obtained a quota of investment in yuan which opens the way for it to invest part of its currency reserves on the Chinese bond market. Under this arrangement, the Chinese central bank allows BNS a quota of 15 billion yuan or about 2.0 billion Swiss francs to invest on the Chinese interbank bond market.

In a separate statement, the Swiss finance ministry welcomed the agreement with China, saying it showed that Switzerland was playing an increased role in the internationalisation of the Chinese currency.

A free-trade agreement between China and Switzerland took effect on July 1. It is the first agreement of its type between China and a European country. China is the sixth-biggest export market for Switzerland, and the fourth supplier to it.

Switzerland hopes that with this agreement it can get ahead of other European countries, acting as a bridgehead into Europe for Chinese trade and companies, and also as a centre for finance in yuan. Switzerland is not a member of the European Union but has close trading relations with it.

The Swiss finance industry is also re-structuring its activities to compensate for constraints arising from new international agreements, and from US action clamping down on cash outflows into foreign banks.

 

 

 

 

 

Source : Channel News Asia | July 21, 2014

Thomas D’Innocenzi

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About thomasdinnocenzi

Thomas D’Innocenzi is a highly accomplished, results-focused international consultant with extensive experience in global sourcing and business development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global marketing and sourcing operations. He has extensive experience in international business development to accommodate rapid growth. Skilled in building top-performing teams, bench-marking performance, and developing organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. Tom founded Nova Advisors with the mission of providing expert Global Business Development consulting services for companies seeking to expand their market share as an independent consultant. Tom has a network of experts and advisors throughout the Asia-Pacific region and North America. His expertise includes business development, global sourcing, manufacturing, commodities, logistics, QA/QC, FDA, regulatory compliance, sustainability, and supply chain optimization. Tom is experienced in the medical device, apparel, consumer goods and technology services verticals helping companies advance their global sourcing capabilities and develop new markets through a local and sustained approach. Located in SE Asia and the United States, Tom expands market reach to drive sales. His global sourcing strategy includes directly negotiating with commodity suppliers, supply chain networks and distributors for optimal terms based on his expertise and first-hand knowledge of the players. Contact Tom to use his consulting service to increase your global market and make global sourcing profitable for you in the Asia Pacific Region and the United States. http://www.NovaAdvisors.com thomas@NovaAdvisors.com USA Direct: +1.904.479.3600 SINGAPORE: +65.6818.6396 THAILAND: +662.207.9269
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