EDC, Chinese bank promoting renminbi in trade
Could save Canadian exporters as much as $2.8 billion in transaction costs over a decade.
Canadian Chamber of Commerce
Currency trading hub
Export Development Canada
The two parties will sign a memorandum of understanding to launch the clearing function for North America’s first Chinese currency trading hub.
The off-shore, virtual trading hub will allow for faster conversion of Canadian dollars into the renminbi, also known as the yuan.
The move is intended to help Canadian companies save on exchange costs and to increase trade between the two countries.
It will also make Canadian exporters’ goods more attractive to Chinese companies that prefer to pay in renminbi.
The deal to establish a renminbi trading hub was announced during Prime Minister Stephen Harper’s trip to China last fall.
“At its core, the relationship with ICBK is about laying the groundwork to help make it easier for Canadian companies with business interests in China to manage their currency exchanges and their Chinese market financing,” said Mairead Lavery, senior vice-president of business development at EDC.
“ICBK and EDC will be looking at ways to make the transactional aspect of Canadian and Chinese trade a little less cumbersome.”
A report by the Canadian Chamber of Commerce said that creating the trading hub could boost exports from Canada to China by as much as $32 billion.
And Canadian exporters could save as much as $2.8 billion in transaction costs over a decade.
Finance Minister Joe Oliver said the trading centre will strengthen business ties between Canada and China.
“Through lower transaction costs, it is now easier for Canadian firms to trade with and do business in China. This will mean jobs, growth and long-term prosperity for Canadians and a brighter future for both our great countries,” Oliver said in a statement.
© 2015 The Canadian Press