Renminbi conquers Europe

04.03.2014

The first European conference on renminbi has been hosted in Luxembourg. During the conference participants from China, Hong Kong, London, Paris, Frankfurt and Luxembourg came to the conclusion that value of renminbi as the international currency grows. The place of hosting conference is deliberate: Minister of finance marked that Luxembourg is one of the main recipient of Chinese foreign direct investments and it is the biggest European center where assets are concentrated in renminbi. The European experts agree that despite of the recent fall of renminbi rate to the USD, the Chinese currency is still stable for investments.

The main topic of the conference was discussion of European financial centers value in renminbi’s strength as international currency. As for China the government hopes that renminbi will be included in the currency basket by 2015.

Based on: http://www.luxembourgforfinance.lu/complementarity-financial-centres-key-renminbi-internationalisation

Expert’s opinion

Jamaican currency system was formed in 1976 – 1978 as result of restructuring Bretton – Woods currency system. Aside refusal of the gold standard and gold par of currency a system of special drawing rights was set. SDR are used by states for exchange reserves formation. Issue of SDR is operated by International Monetary Fund.

States – members of IMF received the certain interest of SDR according to interest in the main capital asset of the fund. They function as unit of accounting inside the IMF, but under certain condition they can be converted in a national currency.

The International Monetary Fund uses price quotation of SDR based on volume weighted rate of the currency basket, consisting of the following currencies:

1. USD— 41,90 %,

2. Euro — 37,40 %,

3. GBP— 11,30 %,

4. Yen— 9,40 %

The percent of each currency is revised each five years. This distribution was in 2011 and the next will be in 2015. By the next year China plans to enter the International Monetary Fund with its own share in main capital assets fund.

Yaroslav Lomakin ( Managing partner of Honest & Bright” company)