20131204 Yuan / Remimbi – a new global currency

The news that Standard Chartered is to be permitted, by China, to trade in yuan / remimbi in the UK has been greeted with surprise and, even concern and consternation by some.

Interviewed by Bloomberg TV today (4 December 2013), Hans Redeker, Head, FX Strategy, Morgan Stanley, London said “We are seeing signs of the RMB becoming a global currency.”

But there should be no surprise. In 1998, in the second edition of How not to be a money launderer (and until the beginning of December 2013 appearing on this site as an extract from the book), I wrote “There are already three times the population of either the EU or the US using a single currency – the Chinese Yuan. Many of the states in South East Asia are culturally linked to China (including Japan, although it seeks to deny it) and the paranoia shown by, for example, some Indonesians, towards the Chinese merely underlies the strength of the Chinese influence. A freely convertible Yuan, in which international trade can be conducted, would easily swamp local currencies. The freeing of controls on the Yuan would militate against the arguments for those Central Banks who have for several years been reluctant to permit the opening of offices of Chinese controlled banks in leading financial centres. The end result would be that the Yuan would become the dominant global trading currency.” I was talking of a time-scale of 20 years.

It’s nice to know that at last someone has expressed agreement with that view.