Wednesday, January 21, 2015

WOW Swiss and Chinese Central Banks Cut Deal for Chinese Currency Clearing (A Serious Poke at the Dollar?)

Switzerland's central bank said today in a statement that it had agreed with the People's Bank of China to establish clearing arrangements in Switzerland for renminbi trading and extend a pilot scheme for clients of Swiss banks.

"It will promote the use of the renminbi by enterprises and financial institutions in cross-border transactions, and promote facilitation of bilateral trade and investment," the Swiss National Bank said.

Alongside the pact, the PBOC will extend a pilot scheme for foreign investors to clients of Swiss banks, with a quota of up to 50 billion yuan ($8 billion).

From Davos, Reuters adds:
"We are willing to make Switzerland one of the centers of offshore RMB business," Chinese Premier Li Keqiang told the World Economic Forum.
He said China was committed to opening up more to the outside world, and planned to deepen reforms of financial services and foreign exchange.
Until recently, transactions in China's currency, the renminbi or yuan, have been impractical for all but very large European companies that are able to involve China's central bank in a deal, because the renminbi is not freely convertible.
 In the past five years, China has promoted use of the yuan for trade and investment, and also as a reserve currency to help lower currency risks for Chinese companies and challenge the dollar's global dominance over the long term.
Can a "speculator attack" on the yuan-dollar peg be far behind?



  1. The Chinese are going to try and pull off, with a "gold-backed" Yuan, what the United States did with the "as good as gold" FRN.

    Try your hardest to get out of all fiat / non-commodity currencies.

  2. The Chinese want the yuan to be what the dollar has been, the reserve currency of the world. It will be their undoing as the dollar will soon be ours.


  3. The Chinese have made currency swaps with many countries with cross-border trade in either the RMB or the local currency of their trading partner. Recently, they established a swap with the British Pound at about the same time as the CHF swap.