ASX and the Bank of China have signed a heads of agreement to develop the Renminbi (RMB) as a currency in Australia's financial markets.
The heads of agreement complements the recent appointment of the Bank of China as the official RMB clearing bank in Australia by the People's Bank of China. Official RMB clearing banks have direct access to China's onshore RMB and foreign exchange markets, and enhance liquidity in the local market.
ASX and the Bank of China launched an RMB settlement service in Australia in July 2014. The service allows Australian companies to pay and receive RMB in near real-time and in the same way as they transact in Australian dollars, reducing their risk and the cost of doing international business.
By signing the heads of agreement ASX and the Bank of China commit to explore opportunities that will expand the role of the RMB in financial markets. This includes increasing transaction volumes in the existing RMB settlement service via customer education seminars and marketing initiatives; facilitating the issuance and trading of debt market products and interest rate and commodity derivative products denominated in RMB; and promoting ASX in China and other Asian markets as a venue for raising equity capital in Australian dollars and, in future, RMB.
The signing of the agreement was attended by the Australian Prime Minister Tony Abbott and Xi Jinping, President of the People's Republic of China.
Elmer Funke Kupper, ASX managing director and CEO, said: "The appointment of the Bank of China as the RMB clearing bank for Australia supports the development of Australia as a financial hub for RMB in the Asia Pacific and deepens the Australia-China economic relationship. ASX congratulates the Reserve Bank of Australia and the People's Bank of China for reaching this milestone.
"The heads of agreement strengthens the relationship between ASX and the Bank of China. It will enable us to explore the full potential of the RMB in Australia's trade relationship with China and in our domestic financial markets. This could include the development of RMB-denominated bonds and derivatives that can be quoted and traded on ASX. It will also improve the attractiveness of Australia as a listings location for Chinese companies."
Tian Guoli, chairman of Bank of China, said: "The Bank of China attaches great importance to the development of Sydney as an offshore RMB centre. China is Australia's biggest trading partner and Australia is one of China's largest investment destinations. The expanded cooperation between the Bank of China and ASX will facilitate cross-border RMB investment and financing by business, and promote Sino-Australian trade and economic links."
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