Growth in renminbi business in Germany
Renminbi trade in Germany has experienced strong growth: German-issued securities denominated in renminbi (RMB) have more than quadrupled since last spring. The issuance of numerous "Goethe bonds" and other debt securities caused the volume to rise from just under RMB 5 billion to over RMB 21 billion.
According to a survey of German credit institutions, RMB-denominated deposits held by German financial market participants are relatively constant at approximately RMB 12 billion. Lending to the interbank market as well as to customers outside the banking market also amounts to roughly RMB 12 billion. Turnover figures for foreign exchange transactions involving renminbi are very volatile and are also affected by seasonal factors. They ranged between RMB 300 billion and RMB 1.4 trillion in the past three quarters (see table).
“Germany’s renminbi business has already seen very positive growth," commented Dr Joachim Nagel, Member of the Bundesbank's Executive Board."For us, it's about providing sustainable financial support for growing trade and investment relationships with China. Many projects have been launched at the enterprise level and these will lead to further globalisation of the renminbi," Dr Nagel continued.
Since July 2014, German institutional investors have been able to apply for an RQFII (Renminbi Qualified Foreign Institutional Investor) quota and use it for direct onshore investment in China. Exchange operators recently announced an additional joint venture between Germany and China at the infrastructure level."Market participants have made great efforts in recent months to establish the RMB business. The further development of RMB products therefore remains an important task for the financial industry," Dr Nagel said.
Projects were also initiated in the field of academia. For example, the Sino-German Center of Finance and Economics, affiliated with the Goethe University in Frankfurt, is due to open in September. The Center's Board of Trustees will be co-chaired by members of the People's Bank of China's Management Team and members of the Bundesbank's Executive Board.
On 24 March 2014, the Deutsche Bundesbank and the Chinese central bank, the People's Bank of China, signed a memorandum of understanding regarding the clearing and settlement of payments denominated in renminbi in the Frankfurt financial centre. Part of the agreement was that both central banks would also regularly exchange data on deposits, lending, foreign exchange transactions and securities denominated in RMB. On 19 June 2014, the Frankfurt branch of Bank of China was designated the first RMB clearing bank in the euro area.
|2014 Q3||2014 Q4||2015 Q1|
|Deposits held by German MFIs||RMB 11.6 bn||RMB 12.7 bn||RMB 11.7 bn|
|RMB-denominated loans issued by German MFIs||RMB 12.6 bn||RMB 11.9 bn||RMB 11.5 bn|
|Foreign exchange trading by German banks in RMB1||RMB 989 bn||RMB 1,415 bn||RMB 311 bn|
|Outstanding RMB-denominated securities in Germany||RMB 4.7 bn||RMB 8.8 bn||RMB 21.7 bn|
1These are flow variables. All other figures are stock variables.