Foreign Investment Banks Staged "International Price War"

The near future,

Since the beginning of this year, there has been frequent movements in the internationalization of RMB, and overseas companies have greatly increased interest in renminbi settlement. Foreign banks such as J.P. Morgan, Citigroup, HSBC and Standard Chartered are optimistic about their market potential and are pushing forward cross-border trade RMB settlement business.

Interested in large multinational companies

JP Morgan, who occupies 28% of the US dollar settlement share in the Chinese market, recently held the first round of RMB cross-border trade settlement roadshow in New York. Recently, it began preparations for the second round road show in September.

Xu Sheng, director of fund management department of J.P. Chase Bank (China), said that at present, the renminbi has the advantage of interest rate, and in the long run, it has the advantage of Morgan.

Because of the business opportunities of RMB cross-border trade settlement, the price competition of banks is increasing.

HSBC and Standard Chartered have begun offering paction discounts and other financial incentives to companies that choose to use renminbi settlement.

However, there are still many obstacles to cross border trade RMB settlement.

Xu Sheng revealed that in overseas roadshows, overseas enterprises are most worried about three major problems: if the importing enterprises pay in Renminbi, where the renminbi comes from; the exporters worry that there will be no channel investment after they receive the Renminbi; in addition, there is a shortage of risk prevention tools.

If RMB is settled, foreign exchange enterprises need to manage exchange rate risk. Avoiding risks is a great challenge.

Gong Fangxiong:

Capital account liberalization

Substantial progress in the future

Gong Fangxiong, vice chairman of investment bank of JP Morgan, said that the full internationalization of the RMB and the realization of the status of the global reserve currency must be accompanied by capital account liberalization and currency convertibility.

In addition, the development and market capacity of RMB as settlement currency depends on the depth and breadth of overseas RMB investment products market.

Recently, domestic financial institutions began issuing RMB bonds and other products in Hongkong, and small QFII is also pushing ahead.

Gong Fangxiong said a more direct way is to develop some Renminbi denominated investment products overseas, including stocks.

Gong Fangxiong predicted that there should be substantial progress in the opening of RMB capital account in 3~5.