Taiwan to begin RMB trade settlements

Beijing and Taipei signed an agreement on Friday to allow Taiwan banks to settle transactions in renminbi, the latest step toward making the yuan a global currency, Financial Times reported. In a memorandum of understanding, the two parties agreed that Taiwan will become the second major center for settling RMB transactions after Hong Kong. “We’re not talking about getting a lot of business in one day… but the opportunity we see is actually quite huge,” said Jerry Yang, a banking analyst with Daiwa. ANZ economist Raymond Yeung said trade settlement between the island and the mainland could reach US$12 billion a year, considering how fast some other markets have begun using the renminbi in trade. China is Taiwan’s largest trade partner with total two-way trade for the first half reaching US$59.5 billion, according to Taiwanese government statistics. In addition to Taiwan and Hong Kong, Singapore and London have also been vying to become hubs for offshore yuan.