The Role of London and Frankfurt in Supporting the Internationalisation of the Chinese Renminbi

Pardo, Ramon Pacheco; Knoerich, Jan; Li, Yuanfang

doi:10.1080/13563467.2018.1472561

Cited by 19 publications

(17 citation statements)

References 33 publications

(55 reference statements)

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“…In London, the first Western clearing centre for the renminbi was opened (Lockett and Hughes, 2016). It was argued that “the most important reason to establish the London RMB centre” was because it would have “safeguard[ed] London's status as world-leading financial centre” (Pacheco Pardo et al, 2019: 539–540). The UK was the first country in the West to allow a consortium of industries, within which the state-owned China National Nuclear Corporation featured, to build the Hinkley Point C civil nuclear plant.…”

Section: Britain's China Policy: From Ethical Foreign Policy To the G...mentioning

confidence: 99%

The End of the “Golden Era”? The Conundrum of Britain's China Policy Amidst Sino-American Relations

Leoni

2022

Journal of Current Chinese Affairs

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This analysis contributes to a fast-growing body of literature on Sino-Western relations and the tension between economic and security interests. It takes Britain's China policy as a case study considering the Integrated Review 2021. It argues that London's stance towards Beijing has shifted – officially – from the so-called “golden era” to a complex phase of diplomatic–military tensions and scrutinised economic relations, principally because of US pressure. However, this shift de facto has not had a structural impact on the economic side of the relationship between London and Beijing. The article reaches this conclusion by framing its narrative through the lens of the economy-security conundrum at the heart of the Liberal International Order and through the lens of the New Cold War between the US and China. These two factors are crucial for understanding the change between Britain's China policy pre- and post-2016.

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Section: Britain's China Policy: From Ethical Foreign Policy To the G...mentioning

confidence: 99%

The End of the “Golden Era”? The Conundrum of Britain's China Policy Amidst Sino-American Relations

Leoni

2022

Journal of Current Chinese Affairs

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“…This reinforces the view that geographical scope is a function of specific geo-political and financial centre locational factors (Töpfer and Hall 2017). While some progress has been made in establishing settlement centres beyond non-allied locations using a negotiated approach (Knoerich et al 2018), geographical scope continues to distinguish China from other creditor nations such as Japan. Although the Yen is not an international currency in the same way as the US dollar, it has gained considerable regional use by non-residents (Angrick 2018b).…”

Section: Settlement Banks Geographical Reach and Governancementioning

confidence: 99%

“…This refers to the challenge of covering local currency denominated financial liabilities. While there is an emerging literature on the geopolitics and use of the RMB (Knoerich et al 2018), less attention has been given to the role of state settlement banks and offshore markets as a mechanism for mitigating the uncovered liability problem. These banks have sought to fund China's hard currency needs since the 1950s but have received limited attention in the literature.…”

Section: Introductionmentioning

confidence: 99%

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Offshoring the Uncovered Liability Problem: Currency Hierarchies, State-Owned Settlement Banks and the Offshore Market for Renminbi

Tobin

2021

New Political Economy

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The existence of an uncovered liability has historically benefited foreign banks and lead currencies. Using the case of China's efforts to fund its foreign exchange needs by exploiting loopholes in the international financial architecture, the paper examines whether using state-owned settlement banks as a means of intermediating a specialised 'nondeliverable' financial asset in offshore markets can substitute the institutional and technical prerequisites that developing economies typically lack. The findings show that while offshore money markets can reduce US dollar dependency in areas such as trade invoicing that do not depend on currency delivery, increasing the offshore holdings of RMB is more challenging. The reasons for this are to be found in the way the governance, geographic and credit generating limitations of state settlement banks reinforce the constraints imposed by the uncovered liability problem. The findings distinguish the historical evolution of the RMB's offshore use from other offshore markets and reinforce the impossibility of separating issues related to trade infrastructures from those related to the structure of the international financial system.

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“…Although political economists have incorporated sub-national spatial scales into the investigations of RMB internationalization and monetary transformation more broadly, these have not cohered into sustained theoretical consideration of their distinctive modalities of power. Those scholars who do explicitly examine political scales such as the global city tend to treat them as important 'sites' of contestation wherein national interests are pursued ( Pardo et al, 2019;Subacchi & Huang, 2012 ). As Li (2018, 452) has aptly observed, 'it is still analytically important to recognize the role of Hong Kong in the different policymaking stages that led to the maturation of the world's first offshore renminbi center.…”

Section: From Currency Internationalization To Transnationalizationmentioning

confidence: 99%

RMB transnationalization and the infrastructural power of international financial centres

Green

Gruin

2020

Review of International Political Economy

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The internationalization of the renminbi (RMB) raises important questions concerning dynamics of transformation within the post-crisis global monetary order. International political economists have predominantly analysed the currency's crossborder evolution as a consequence of China's macroeconomic conditions, domestic politics, and currency statecraft within a broader framework of international monetary hierarchy. In this article, we draw upon insights from financial geography to rethink the rise of the RMB as a process of transnational market-making involving actors and political agency across distinctive scales. We develop a multi-scalar framework that illuminates the distinctive agency of London and Hong Kong in this process, conceptualizing it as a form of subnational infrastructural power that facilitates financial market-making in concert with (and despite) dynamics of interstate geopolitics. This goes some way in remedying the scalar deficiency of existing theories of political economy of international money, as well as integrating considerations of power and political agency into financial geography perspectives. Empirically, we trace how the unique development of London's offshore RMB market reflects this interplay between private financial actors, municipal-level authorities, and national political priorities. Finally, we discuss how IFC-led market-making relates to system-level dynamics by both facilitating 'tipping points' in global monetary change, as well as diluting national monetary power.

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The Role of London and Frankfurt in Supporting the Internationalisation of the Chinese Renminbi

Cited by 19 publications

References 33 publications

The End of the “Golden Era”? The Conundrum of Britain's China Policy Amidst Sino-American Relations

The End of the “Golden Era”? The Conundrum of Britain's China Policy Amidst Sino-American Relations

Offshoring the Uncovered Liability Problem: Currency Hierarchies, State-Owned Settlement Banks and the Offshore Market for Renminbi

RMB transnationalization and the infrastructural power of international financial centres

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