The People’s Bank of China has sealed an agreement with the ECB for a line of currency swaps aimed at boosting the growing internationalization of China’s renminbi. The deal signed on October 19, 2013 has a duration of three years and is worth 350 billion yuan, or 45 billion euros. This will allow for more availability of Chinese notes in European banks making trade between the EU and China easier.
The swap with the euro, second in the world in terms of reserves and payments, assures liquidity and stability of financial markets. The Xinhua press agency highlights that the agreement also serves as a confirmation of trust in the Chinese economy, indicating the forecast of the country’s president Xi Jingping that “a speed of 7% per year is sufficient to double GDP and per capita income between 2010 and 2020”.
With a quota of 1.5%, the renminbi is the eighth currency traded on the international market. The accord with Europe follows those concluded with the UK and Iceland, in addition to numerous countries in Asia and South America, in the latest sign of an increasing international presence.