New Report Shows Impact of Canada as only North American Chinese Currency Trading Hub
CALGARY, Jan. 12, 2016 /CNW/ - Canada has quietly, but shrewdly, connected its own financial system to China's, says a report released today by The School of Public Policy and Executive Fellow John Curtis. China is quickly on its way to becoming the largest economy on earth, but relatively few of the trades occurring between China and other countries happen in China's own currency. Canada's new Renminbi (RMB) trading hub serves two important functions. First, it makes trades between Canada and China more efficient, as there is no need to convert Canadian dollars to USD. Second, it spurs the growing internationalization of China as a force in financial markets.
"The RMB trading hub will help to facilitate more trade and investment between China and Canada, in addition to expanding the exchange of businesspeople and students. The RMB hub is an important milestone both for Canada and China. It signals China's desire to expand its international financial footprint, and gives Canada a major head-start as the only North American country with an RMB trading hub. Canada will be seen to be an important partner in China's over ten-year effort to become an officially recognized major player in the world's international financial system reflecting its increasing economic power," said Curtis today.
The Chinese Renminbi is unique in that it has been a highly controlled and inaccessible currency. That has hampered its liquidity and added risks to exchange rates. The RMB hub reduces those risks. Just as important though, is the symbolism of Canada's new hub – with the hub, Canada has established itself as an early partner in China's internationalization. This hub could save billions for Canadian businesses. The key now, however, is for those businesses to become more aware of the hub and take greater advantage of it.
SOURCE The School of Public Policy - University of Calgary
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