The ASX-Bank of China Renminbi Settlement Service: increased accessibility, lower risk and costs, and new growth opportunities for Australia in Renminbi settlement
The internationalisation of the Chinese Renminbi (RMB) is proceeding, with a sequence of reforms designed to increase its use in international trade and investment.
Currently only 4% of settlements in China are in RMB (and 1% of those involving an Australian counterpart); the Chinese government plans to increase this proportion to 15% by 2015.
The Renminbi Settlement Service seeks to allow customers to carry out high-value electronic cash transfers in real time in RMB in the same way they do for AUD.
The ASX-Bank of China Renminbi Settlement Service will deliver the following benefits to its customers:
· Increased accessibility, allowing Australian companies to efficiently use RMB as a settlement currency in their cross-border transactions with trading and investment partners in China.
· Lower costs and risk, allowing Australian companies trading with China to pay and receive RMB on a near real time basis, thereby reducing settlement risk and the cost of conversion.
· New growth opportunities, by expanding the scope and global connectivity of Australia’s financial markets. In addition, this initiative will allow for a range of investment products, including RMB denominated bonds and structured instruments, to be developed over time.
The Renminbi Settlement Service will leverage ASX’s Austraclear infrastructure and its network of customers, as well as the Bank of China’s systems and network of customers.
· Is one of the most established financial networks in Australia, with a long history of providing reliable service and near-perfect system availability.
· Already provides a reliable, secure and independent way for customers to carry out high-value electronic cash transfers in real time in Australian dollars: it processes over A$3 trillion in cash transfers every year.
· Has over 800 participants, representing the majority of the Australian financial market.
· Is a licensed Clearing and Settlement facility under the Corporations Act 2001 (Cth), overseen by the Australian Securities and Investment Commission, and also subject to the Reserve Bank of Australia’s Financial Stability Standards.
The Bank of China:
· Was formally established in February 1912, and from 1912 to 1949, it served as the country's central bank, international exchange bank and specialised international trade bank.
· Based on 2012 financial data, is ranked 9th in Tier 1 capital, 14th in total assets and 4th in pre-tax profits among the worlds’ top 1,000 banks by Banker Magazine.
· Is active as a Renminbi “clearing” bank in Shanghai, Hong Kong, Macau, Taipei, Kuala Lumpur, Luxembourg, Manila, Moscow and Phnom Penh.
· Was awarded best Renminbi clearing bank in Asia Pacific by The Asian Banker Magazine in 2013.
The indicative timeline for the Renminbi Settlement Service highlights the key dates for delivering the service to customers over the coming months; it is subject to the successful completion of testing and the approval by regulatory authorities of relevant rulebook changes.
Joining the Renminbi Settlement Service
Existing Austraclear customers can join the Renminbi Settlement Service either by opening an RMB account at the Bank of China or by asking their Austraclear participating bank to do so. Other customers can join the Renminbi Settlement Service by: becoming an Austraclear participant and opening an RMB account at the Bank of China; or, becoming an Austraclear participant and asking their Austraclear participating bank to open an RMB account at the Bank of China; or, becoming the customer of an Austraclear participating bank with an RMB account at the Bank of China. Please use the contact points listed below if you would like to join the Renminbi Settlement Service.
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Senior Analyst – Settlement Services
Telephone: +612 9227 0034