Banks Back Switch to Renminbi for Trade

As China’s economy continues to grow, the largest banks from around the globe seek favor and rapid profits there. HSBC relocated its chief executive from London to Hong Kong and, along with Citigroup and some other banks, HSBC offers discounts for companies that use the renminbi rather than the dollar for trading. “With renminbi trade settlement volumes expected to increase rapidly, banks are under pressure to establish a foothold in the nascent market and demonstrate to Chinese officials that they are committed to the scheme,” explains Robert Cookson for the Financial Times. McDonald’s, the US fast-burger chain, was the first foreign multinational to issue renminbi-denominated bonds. A renminbi rush by banks – combined with widespread lack of understanding about the complications of currency trading – could boost value of China’s currency and instigate yet another problematic bubble. – YaleGlobal