Beijing and Berlin are teaming up in order to launch an offshore yuan trading center on March 28, 2014, after the president of China, Xi Jinping visited Germany during his European tour. The central banks of the two countries – the People’s Bank of China and the Bundesbank – have signed a Memorandum of Understanding in Berlin in order to allow the clearing and settlement of yuan trades in Frankfurt, the financial capital of Germany.
The center – which will be situated in Frankfurt – will be the first of its kind. The two nations signed a series of deals on March 28, 2014. Meng Hong, an expert on Germany at Renmin University of China said that the trading center will be a great facilitator for China and Germany trade, as well as China and EU trade.
A senior associate at the law firm Clifford Chance in London, Maggie Zhao said that the agreement demonstrates a commitment by the two governments to work together on the internationalization of the yuan. Zhao added, “It shows that the Chinese government is keen to support the yuan’s internationalization, and that the German government is keen to support its financial services industry to get more involved in the yuan internationalization process”.
The senior associate went on to say that the next five to ten years will be a crucial period for the two countries’ growth.
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