sovereignman.com/ By Simon Black / October 1, 2014
The Chinese central bank, People’s Bank of China, issued a press release announcing the authorization of direct trading between the renminbi and the euro on the inter-bank foreign exchange market.
This is huge. The euro is the second most traded currency in the world, after the US dollar. The European Union is already China’s biggest trading partner and this is a major step in further increasing trade and investment ties with the EU as there is now a direct exchange rate between the two currencies, without the need to use the US dollar as the conduit.
The renminbi is quickly marching down the path of internationalization as the Chinese currency is now directly exchangeable with the US dollar, Australian dollar, New Zealand dollar, Japanese yen, British pound, Russian ruble, and Malaysian ringgit.
The use of renminbi in international trade settlement nearly tripled in value worldwide over the past two years according the The Society for Worldwide International Financial Telecommunications (SWIFT), and over one third of financial institutions around the world already use renminbi for payments to China and Hong Kong.