From George Osborne down, London is very active in promoting itself as the western RMB hub with some success. The benefits for London based traders , who are prepared for what is about to meet them are easy to see. What is perhaps more cloudy just at this stage is how much benefit there is for those on the fringes.
Our journey took us in diplomatic cars to the Presidential Palace for a full diplomatic audience with the President of the Republic of China - Ma Ying-Jeou.
The statesmen fireside chat included reference to London being home to 42% of FX trading, but that Taipei holds 30 times more RMB deposits than London and that number is growing. Both sides wanting to be sure, over a cup of friendship tea, of who has most cards to play at the moment.
Our trip also included a meeting with the Deputy Governor of the CBC – Taiwan Central Bank and his FX team. Again keen to stress the economic strength of the nation – who’s economic figures are indeed quite good.
I asked the Deputy Govnenor what the appetite would be for Internationalising the TWD ahead of the RMB? Creating a freely traded proxy for China in addition to the CNH.
The capital flow benefits being quite large for the technology export led economy. The Govenor and his number 2 – leaned back …looked at each other … and smiled – with that – we were just talking about that in the hall way type look on their face.
The answer was two fold – Firstly a domestic political issue, where convincing the electorate to remove their export protection would be difficult ( although with the shift of technology manufacturing slowing moving to China anyway perhaps less so in the future ) the other being the lack of financial expertise in country.
“ We’re not Hong Kong or Singapore” – Something the Mayor and the City of London are keen to help them with.
I also asked about the big Chinese flows into the country ( RMB deposits up from 39 Billion in Feb of 2013 to 182 Billion in Jan 2014 ) and when it might overtake the TWD as the currency of choice domestically. Which was a somewhat cheeky question - its fair to say.
This resulted in the Guv pointing out that RMB only represented 1.2% of total deposits in the country. I bit my tongue to avoid saying – Yes – but that’s only in the last 12 months – what is that number going to be in 5 or 10 years from now ?
Either way there is bright future for the RMB and perhaps the most telling of all was the percentage of third currency trading in Taiwan over the last year.
EUR had dropped by a third, and CNY had increased 250%.