PH now fastest growing market for yuan-denominated trade in Asean
MANILA, Philippines—The local unit of Bank of China has been officially established as the clearing bank for yuan in the Philippines following a deal signed between the monetary regulators of both countries in 2018, the bank said on Tuesday (Jan. 19).
This developed as the Philippines was cited as the fastest growing renminbi (RMB) market in Southeast Asia by the Society for Worldwide Interbank Financial Telecommunication (Swift) network, whose June 2020 data showed the Philippines ranked first in the region in terms of growth rate of RMB clearing volume this year, ahead of countries like Singapore, Indonesia and Malaysia.
The total volume of RMB cleared in 2020 was 447 billion yuan, a 133.8 percent increase over 2019’s total of 191 billion yuan.
In a statement, Bank of China Manila said that, as the designated clearing bank for yuan-denominated business in the Philippines, it can now process the settlement of accounts and other core services such as remittance, foreign exchange, liquidity support, and banknotes for local participating banks.
The new clearing scheme can also provide local market participants with access to mainland China’s yuan onshore rates as an alternative to the more accessible offshore rate.
The onshore “CNY” is the renminbi rate that can only be traded in mainland China or through clearing banks appointed by the Chinese central bank internationally. By making it easier to trade with counter parties in mainland China, Bank of China Manila can help improve economic and trade partnership to promote development between Philippines and China.
At the weekend, the ceremonial launch of RMB Clearing Bank in the Philippines operated by Bank of China Manila was held at Shangrila The Fort in Taguig, with China’s State Councilor and Minister of Foreign Affairs Wang Yi and Chinese Ambassador Huang Xilian, together with Bangko Sentral Governor Benjamin Diokno and Foreign Affairs Secretary Teodoro Locson Jr. in attendance.
“We’ve seen tourists, traders, and investors grow more confident in using the currency in the local market,” said Bank of China Manila’s country head Deng Jun. “As we work towards growing the market even further, this establishment will help us provide more focused RMB services to all the local participating banks.”
He thanked the People’s Bank of China and the Bangko Sentral ng Pilipinas for their support and guidance in establishing the RMB Clearing Bank in the Philippines.
Diokno said that the establishment of an RMB clearing bank in the Philippines is an important step in the currency diversification of the local market which “opens up a lot of opportunities for local business in the easing of transactions and reducing the cost of settlement between Philippine and Chinese companies.”
“As we further diversify the currency basket in the local market, we move towards an environment with more choice, and that is good for business,” he said.
