The Manila unit of the Bank of China – the largest financial institution of the world’s second largest economy – was designated as the clearing bank for renminbi-denominated transactions in the Philippines after an agreement signed on Wednesday, Sept. 18, between the central banks of the Philippines and China.
As a renminbi-clearing bank, Bank of China Manila will enable local financial institutions to transfer RMB funds and take part in China’s foreign exchange, security and bond markets.
It will also help local banks provide clients with services in entering the Chinese financial market, increase RMB assets or diversify investment portfolios.
Deng Jun, Bank of China Manila country head, said in a statement that having a designated clearing house for RMB transactions “will also boost local investments” and, on a broader front, strengthen economic ties between the Philippines and China.
The volume of RMB transactions in the Philippines has been growing, according to the Society for Worldwide Interbank Financial Telecommunications (Swift).
Swift data showed the total amount of RMB cleared in the Philippines from January to June 2019 was 127.4 billion, an increase of more than 45 percent from the first half of 2018.
In terms of transactions, the total number of RMB clearing activities was up to 12,116 items, an increase of nearly 74 percent from last year’s.
The bank noted, however, that while it expects this trend to continue, its clearing facilities would take time to be in full operation and its systems would need to be prepared.
With a local clearing bank in place, RMB transactions are projected to grow as more Chinese tourists, traders and investors, along with their Filipino counterparts, grow more confident in using the currency.
“This new facility will help drive the currency’s use for payments and investments,” said Deng.
He said the surge in RMB denominated financial activities would “foster the shared development of both countries.”
Deng added that he sees foreign direct investments to also rise as RMB use becomes part of Philippine economic activity.
The Bank of China Manila, he said, is “keen” on its role as a “bridge between the Philippines and China.”
He said he sees “quality Chinese direct investors” being attracted to the Philippines and create more jobs and raise domestic companies’ “competitiveness.”/TSB