The internationalization of the renminbi took another step forward in March when all companies in mainland China were permitted to conduct cross-border trade in the currency. No one claims that a revolution is about to occur but the impact will be profound.
"The transition will be relatively slow," says Madhavan Ramaswamy, global head, product management, banks, transaction banking, at Standard Chartered. "Asian countries have already begun to make the change to renminbi and Africa and Latin America will follow with Europe and the US last." He adds: "But eventually every bank in the world will need a renminbi account."
That knowledge has prompted a rush among banks with capabilities in the country to win FIs’ business as they seek to serve their client base. Everyone knows that Chinese banks have the largest footprint in China – and that many global banks rely on them to deliver parts of their coverage in the country. So will they win the majority of business?
Colette Selfslagh, global head of financial institutions segment at JPMorgan Treasury Services, thinks not. "Global providers not only have people on the ground but have experience both within China and globally," she notes. "Frequently, FIs will open accounts with one or two Chinese banks, but also with a global provider so that they benefit from their global clearing experience, and from having people in their own time zone and access to information about business practices and regulatory issues that is easily understandable.