As reported by Reuters, the European Central Bank and the People’s Bank of China have established a currency swap agreement for a line of 350 billions Chinese Yuan. The agreement will have both effects to both increase the RMB liquidity in Europe and to strengthen the role of RMB in international trade: in fact, European Companies to turn to the EU Central Bank for obtaining liquidity for their renminbi-denominated bills. Even if there are not yet relevant technical details, as confirmed by Mr. Josh Noble, Financial Times, it is possible that the EU Central Bank may apply a small mark-up to the official conversion rate between Euro and Chinese Yuan. At the same time, China would have the undoubtable advantage to further diversify its monetary reserves.

This latest Agreement confirms China’s goal to internationalize its currency: the People’s Bank of China signed currency swap agreements with over 21 Countries and Regions worldwide, including but not limited to Indonesia (100 billions RMB), Iceland (3.5 billions RMB, renewed last 30 September), Albania (2 billions RMB) Australia (200 billions RMB), New Zealand (25 billions RMB), Malaysia (80 billions RMB), South Korea (360 billions RMB), Hong Kong (400 billions RMB), Brazil (30 billions RMB) and UK (200 billions RMB), and, as confirmed by SWIFT, the Chinese Yuan is the world’s eighth most-traded currency, with a market share of 1.5 percent and overtaking the Swedish krona, the South Korean won and the Russian rouble.

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