BERLIN: China and Germany have formally agreed to establish a Frankfurt-based exchange to trade a host of renminbi-denominated products, in a further sign of Europe’s aggressive courting of Beijing for financial business.
Angela Merkel, Germany’s chancellor, and China’s premier Li Keqiang attended the signing of the agreement in Beijing on Thursday between Deutsche Börse, the Shanghai Stock Exchange and China Financial Futures Exchange to set up Ceinex.
The deal comes days after UK prime minister David Cameron rolled out the red carpet for Chinese president Xi Jinping in a charm offensive that British officials are hoping will advance their aim of making the City of London a hub for trading products denominated in the Chinese currency. On the first day of Mr Xi’s visit, China issued its first sovereign bond from London.
As the Ceinex deal shows, Beijing is keen to open the use of the renminbi to international investors, with the ultimate aim of challenging the US dollar’s supremacy as the sole major global reserve currency. The Chinese authorities have so far approached the project with caution, taking a series of small steps to drive forward the use of the currency abroad.
Ceinex, which will open for business in Germany’s financial capital on November 18, will allow international investors to buy shares in exchange traded funds that hold renminbi-denominated Chinese assets. Strict controls imposed by China on the use of its currency abroad have until now prevented foreign investors from buying such assets.
