UK and China signed Currency Swap Deal worth 200bn Yuan

Jun 24, 2013 12:24 IST

UK and China in Month of June 2013 signed a three-year deal to swap their currencies when needed in order to boost the Chinese Yuan outside Asia.

UK wishes to become a centre for the Chinese currency which known by renminbi. It is important here to note that the British banks hold 35bn yuan worth of deposits in the Chinese currency. With the signing of agreement Bank of England could draw on the line with the PBOC when there is a sudden shortage of yuan funds in the U.K. market—and make the yuan.

Currency-swap agreements basically allow central banks to swap currencies which can be used by firms to settle trade in local currencies rather than in US dollars.The deal was signed in its effort to promote the yuan in global trade and finance. The Prospective deal was first signed in February 2013.

In year 2012 the UK Treasury had announced plans to make London - the world's largest currency trading hub and the leading international centre for trading the yuan outside mainland China and Hong Kong.

China also has a swap agreement with Brazil worth 30bn dollars and has also signed similar agreements with other trading partners such as Japan, Australia and Hong Kong.

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Read more Current Affairs on: UK and China , Currency Swap Deal

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