Bulletin – December Quarter 2014 The Offshore Renminbi Market and Australia Abstract

The Chinese authorities have continued to make progress in internationalising China's currency, the renminbi (RMB). In particular, the use of RMB for cross-border trade and investment transactions has increased noticeably over recent years and the market for RMB in a number of jurisdictions outside of mainland China – known as ‘offshore centres’ – has developed further. As part of this broader trend, the use of RMB by Australian entities has also increased somewhat, although there remains considerable scope for further growth. In order to facilitate this, a number of policy initiatives designed to allow the local RMB market to develop have recently been agreed with the Chinese authorities. Most notably, these include the establishment of an official RMB clearing bank in Australia and a quota that will allow Australian-based entities to invest in mainland China's financial markets as part of the RMB Qualified Foreign Institutional Investor (RQFII) program.

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