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World Bank issues first Yuan bonds
by staff report via fleet - The Economic Times Thursday, Jan 6 2011, 8:14am international /
imperialism /
other press
Major Investors shun Greenback
HONG KONG -- The World Bank has issued its first bonds in the yuan as China promotes the international use of its currency, also known as renminbi.
The World Bank said in a statement Monday that it is raising 500 million yuan ($76 million) by issuing the two-year bonds, which pay out 0.95 percent in interest semi-annually.
It said the money would be added to its normal pool of cash, rather than being raised for a specific purpose.
The bonds are issued in Hong Kong by the Washington-based lender's International Bank for Reconstruction and Development arm, China Daily reported.
While the investors are mainly Hong Kong based-financial institutions, corporate treasuries and wealthy individuals, the World Bank said its global reputation will also help international investors who have not invested in renminbi before.
The World Bank's bond issue follows those by other institutions such as the Asian Development Bank and companies such as Caterpillar and McDonalds, which issued yuan bonds last year as they seek to tap growing investor demand for financial products in China's currency.
Beijing has been trying to promote Hong Kong as a platform for international banking in the yuan. The former British colony has its own currency, the Hong Kong dollar, and banking system but often serves as a testing ground for China.
Authorities in China have been gradually loosening restrictions on the use of the yuan in Hong Kong. Hong Kong banks started offering renminbi services in 2004 and now offer a range of transactions ranging from deposits to credit cards to trade financing that allows foreign companies to pay their Chinese business partners in yuan.
Do we all remember the 'red peril,' John Wayne's racist "sandshoes" remark; the 'swarming Chinese commies' of the Korean war? Well, I hope the true believers choke on the latest news.
But should we really be surprised? The financial/banker ruling elites, the Rothschild's in particular, were the planners and backers of the Russian Bolshevik revolution! Happy New Year to all the idiots fighting elitist wars around the globe today -- nothing has changed -- the 'enemy' today is the investment darling of tomorrow!
The ruling financial elites could care less about the horrendous loss of innocent life, the social devastation and destruction they directly cause. Every idiot in uniform should now realise they are not fighting for any nation or just cause, they are in reality fighting for a bunch of nationless Transnational Corporations and Banking elites that create enemies with their mass media propaganda arm whenever the need to increase profits and consolidate their power arises!
There is hope however; Stalin was not part of the banker backed Russian revolution against the Rothschild hating Tsar. Stalin quickly went to work terminating the influence of Russian Zionist revolutionaries by simply executing everyone that supported those interests, including Leon Trotsky, who was married to a Rothschild.
The IMF and World Bank -- oppressors of the 'third world' -- have long been the Economic Imperialist arm of the financial elites. To witness the WB trading in Yuan Bonds today defines them exactly for what they are -- so ask yourself why anyone you know should fight criminal wars of mass murder and plunder so a tiny group of wealthy, black hearted, PARASITES that have NO ALLEGIANCES to anything other than themselves, can increase their wealth and power?
[Share this story with those that require a wake-up call.]
China has launched trading in its currency in the U.S. for the first time, an explicit endorsement by Beijing of the fast-growing market in the yuan and a significant step in the country's plan to foster global trading in its currency.
The state-controlled Bank of China Ltd. is allowing customers to trade the yuan, also known as the renminbi, in the U.S., expanding the nascent offshore market for the currency which began last year in Hong Kong.
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The decision is the latest move by China to allow the yuan, whose value is still tightly controlled by the government, to become an international currency that can be used for trade and investment.
"We're preparing for the day when renminbi becomes fully convertible," Li Xiaojing, general manager of Bank of China's New York branch, told The Wall Street Journal. He said the bank's goal is to become "the renminbi clearing center in America."
Until the middle of last year, the buying and selling of yuan had largely been confined to mainland China by the country's strict capital controls. But in July, it opened the currency to trading in Hong Kong. Daily trading has since ballooned from zero to $400 million.
The decision comes ahead of next week's visit to Washington by Chinese President Hu Jintao, when China's exchange-rate policies are expected to once again be in the spotlight.
While businesses and individuals in the U.S. can already trade yuan through Western banks such as HSBC Holdings PLC, the move by a Chinese-owned bank marks a stamp of approval by China on the expansion in yuan trading. Bank of China, which is 70%-owned by the government, now allows companies and individuals to buy and sell the Chinese currency through accounts with its U.S. branches.
Bank of China limits the amount of yuan that can be converted by a U.S.-based individual customer to up to $4,000 a day. The restriction is designed to fend off speculation in the currency, bank officials say. But there is no limit, at least for now, on the amount that can be converted by businesses, so long as they are engaged in international trading. The bank has no restrictions on the ability by U.S.-based customers to convert the yuan back into dollars.
The loosening of restrictions on trading yuan started in Hong Kong, a former British colony under Chinese sovereignty but with its own legal and financial systems. Anyone with a Hong Kong yuan account is now able to trade the currency. Bank of China's move could further open up the currency to trading and attract Chinese companies with offices in the U.S. currency, and this is an inching step forward."
Chinese regulators last month increased the number of exporters that can use the yuan to settle international transactions from a few hundred to nearly 70,000. Some analysts have predicted that it will be only a few years before 20% to 30% of China's $2.3 trillion in imports could be conducted in yuan rather than dollars. Today, less than 1% is done in yuan, according to London's Standard Chartered Bank. While offshore yuan trading has grown rapidly, it's still a fraction of the $4 trillion daily trading in currency markets world-wide and pales next to trading in the dollar, yen, euro and other currencies.
Some skeptics say growth could be curtailed by new regulations announced by the Hong Kong Monetary Authority last month, which puts restrictions on banks' ability to offer yuan-related products in Hong Kong. Analysts say the regulations reflect China's interest in keeping speculators from betting on the yuan's movement and potentially causing disruptions to its economy.
What Beijing is interested in, analysts say, is measured growth in yuan trading. Some experts caution that China could still back track. Nevertheless, some industry observers have called yuan trading outside mainland China a game-changer, as it is one step in allowing the yuan to ultimately float freely. For now, the offshore market acts as a parallel market and doesn't affect the official rate for the yuan set by Beijing.
Bank of China officials say the bank will take into account both the onshore and the offshore yuan trading when setting the exchange rate of the currency for its customers in the U.S.. To trade yuan in the U.S. through Bank of China, a corporation or individual would need to open a yuan account with one of the bank's branches in New York or Los Angeles.
An obstacle to the growth of the business, at least for now, is a lack of demand for the currency among American businesses, which by and large still use the dollar to settle cross-border transactions. McDonald's Corp. and Caterpillar Inc. recently became the first U.S. non-financial companies to sell debt priced in yuan in Hong Kong.
Potential users of the yuan could be attracted to what some might see as a sure bet, since China has said it will continue to allow its currency to appreciate. However, there's still risk given the uncertainty over the pace of appreciation of the currency. Also, banks tend to charge relatively high service fees on yuan accounts.
Mr. Li said the yuan business is "one of the top priorities" for Bank of China's U.S. operations. "We see bright future for the business," he said. The bank's Hong Kong subsidiary has been the sole clearing bank of renminbi banking business in Hong Kong for the past seven years.
The yuan strengthened 3.3% against the dollar last year, as Beijing loosened its peg to the dollar during the summer amid increasing pressures from the U.S. and other trading partners to let its currency appreciate. The yuan's gains stalled after the Group of 20 meeting of the world major economies in November but have resumed as President Hu's visit to the U.S. approaches.
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