A Bank of International Settlements survey released on September 5 reveals that the renminbi (RMB) is now among the 10 most actively traded currencies in the world. This comes on the back of China’s recent draft plans to allow full convertibility of the RMB within the newly approvedShanghai Free Trade Zone(FTZ). Both events are intricately linked and are linked to deeper plans by the Chinese government to both internationalize the RMB and consolidate its influence and standing in global financial markets. This suggests that China’s global integration is no longer limited to trade, but is fast spilling over into the realm of finance.
The establishment of the Shanghai FTZ is expected to provide a boost to the city’s ambitions of becoming a full-fledged international financial center by 2020. While the FTZ was formally approved in August this year, the draft plans pointing towards full convertibility of the RMB within Shanghai were revealed more recently. This comes on top of other plans to liberalize trade, interest rates and the establishment of foreign and joint venture banks in the Shanghai FTZ. Already, foreign banks such as HSBC, Standard Chartered and Citibank have expressed interest in setting up branches in the Shanghai FTZ. READ MORE