3.7 Possibility of creating a renminbi clearing centre in Hungary

following other European central banks, as part of its Renminbi Programme,49 the MNB provides support for increasing the weight of the renminbi (RMB) in

international clearing. While the importance of China in international trade is continuously increasing, the value of trade transactions cleared in RMB was negligible before 2008. Over the past years, the increased international use of RMB has become a priority of Chinese economic policy. China has recently become one of the key foreign trade partners of the European Union, and Hungary plays a significant role in regional relationships with China. To ensure that RMB payment transactions between the market participants concerned are executed smoothly and efficiently, it is possible to develop RMB clearing solutions so as to support Chinese economic activity at a regional level through a centre in Hungary. Using the RMB outside China is contingent on the establishment of the infrastructure required for the clearing of payment transactions. This may be achieved through a Chinese commercial bank present in Hungary holding RMB accounts for banks and businesses in the region, which would enable the intrabank execution of RMB payment orders; consequently, RMB payments would in fact be executed as intrabank credit transfers of a commercial bank. In this case, cross-border RMB payments would be executed through the bank’s parent bank in China. The smooth execution of the service may require the Chinese central bank (People’s Bank of China, PBoC) to designate the Hungarian subsidiary of the Chinese commercial bank as an official clearing bank. This may be needed because the liquidity options provided by PBoC are more readily available to official clearing banks, access to Chinese financial systems and markets can be provided to them more directly, which enables the provision of faster and cheaper clearing services that are also more convenient for customers. The designation of official clearing banks carries the additional benefit that they are also allocated a quota for the Chinese domestic foreign exchange market and bond market.

49 http://english.mnb.hu/Root/ENMNB/mnben_pressroom/press_releases/mnben_pressreleases_2015/mnben_pressreleases_20150219