The purpose of Deutsche Bank’s recent white paper on the RMB is to “As internationalisation of the Renminbi continues at a rapid pace, actively driven by China’s economic strategy” help corporates to ensure “they’re positioned to translate the currency’s development into tangible business opportunities.” The paper, see, is full of practical advice on what to do and/or expect.

Switching to the RMB 

Deutsche Bank stress that RMB is already a trade settlement currency, so corporates need to remember:

• RMB can be used as the underlying currency for L/Cs 
• RMB is the eighth most-traded world currency
• the top three markets (outside of China and Hong Kong) using the RMB for trade settlement were Singapore, Germany and Australia
• emerging markets use of RMB is expect to grow
• there are two key factors driving the RMB’s advance: China’s economic strategy and the commercial benefits to be gained from settling obligations of Chinese enterprises in RMB.

They conclude that, “Ultimately, for corporates with any form of commercial exposure to China or its internationalising currency, the ability to use the Renminbi is both an immediate competitive advantage and vital to future strategy.”

The challenges and opportunities

The paper describes the challenges - onshore and offshore, provides an excellent checklist on ‘Are you ready to switch of Reminbi payments?’, the investment potential for the RMB, and the likely future developments including how to deal with the RMB’s two-way volatility.

Concluding remarks

“Ultimately, corporates looking to capitalise on the advantages of the Renminbi must be aware that there can be no “one-size-fits-all” solution. The most appropriate path to Renminbi adoption will depend on corporates’ individual commercial strategies and optimal timelines for implementation.” Deutsche Bank then go on to stress the need to analyse client’s needs individually, and develop bespoke solutions. 

Finishing with, “It is only through looking at the Renminbi’s development from the perspective of trade entities worldwide, as well as that of regulating bodies, that banks can not only help corporations convert the Renminbi’s challenge into an opportunity, but also ensure they are best-placed to seize this opportunity and realise its full potential.”

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CTMfile take: All banks are trying to help their corporate clients understand and exploit the opportunities in China and from using the RMB. This is a useful white paper, worth obtaining a copy.