January 19, 2015
The announcement that The Bahamas will trade in Chinese currency ensures opportunities for trade and trade financing, encourages more trade relationships and exports given the ability to settle in renminbi, and creates the potential for Bahamian institutions to invest directly in yuan-denominated bonds and securities without the downside of conversion, according to Bahamas Financial Services Board (BFSB) CEO Aliya Allen.
The announcement also means the jurisdiction is much closer to being a gateway between South America and Asia, utilizing its depth of expertise in financial services to facilitate trading relationships and trade finance, she said.
Reacting to the news in a piece for the BFSB's newsletter, Allen said, "Chinese investors and institutions are likely to view The Bahamas as a much bigger financial player.
"And the international and global banks that want to access Chinese clients wishing to transact in their own currency will undoubtedly recognize that being 30 minutes from Florida, in a time zone the same as New York with access to both Latin America and Asia facilitated by the renminbi hub, is a very attractive proposition," she added.
On January 7, Prime Minister Perry Christie announced an agreement with the Chinese president that would allow The Bahamas to trade in Chinese-denominated currency, the renminbi (RMB). The yuan is the basic unit of the renminbi. As a result of the internationalization of the renminbi, it is estimated to be the world's 8th most traded currency.
Allen said that for The Bahamas to become only the second recognized hub for renminbi trading and settlement in the Americas is an acknowledgement of the strength of the diplomatic relationship and friendship that exists between The Bahamas and Chinese governments, and also the confidence of the Chinese in The Bahamas' financial infrastructure that has been refined and developed over the course of 80-plus years.
The arrangement serves as "a glowing endorsement of The Bahamas' financial infrastructure for settlement and clearing and supports the jurisdiction's capacity and burnishes our reputation as a major financial center," noted Allen.
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