RENMINBI transactions are on the rise, and are expected to increase further following the appointment of Bank of China Manila as the designated clearing bank for RMB business in the country.
According to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the total amount of RMB cleared in the Philippines from January to June 2019 was RMB 127.4 billion, an increase of 45.3 percent compared to the first half year of 2018.
In terms of transactions, the total number of RMB clearing activities is up to 12,116 items, an increase of 73.9 percent compared to last year.
RMB transactions are projected to grow, with a local clearing bank in place, as more Chinese tourists, traders, and investors, along with their Filipino counterparts, grow more confident in using the currency.
“This new facility will help drive the currency’s use for payments and investments, further promoting cross-border settlements, trade financing, project investments, and loans. Ultimately, this projected surge in financial activity will foster the shared development of both countries,” said Deng Jun, country head of Bank of China Manila.
Bank of China Manila has been designated as the clearing bank for RMB business in the Philippines following the memorandum of understanding signed by the People’s Bank of China and the Bangko Sentral ng Pilipinas (BSP).
As an RMB clearing bank, Bank of China Manila will enable local financial institutions to transfer RMB funds and participate in China’s foreign exchange market, security market, and bond market.
It will also help local banks expand their product scope and provide better convenience for clients and investors looking to enter the Chinese financial market, increase their RMB asset holdings, or diversify their investment portfolios.
Foreign direct investments may see an upturn as well with the increased international use of RMB through the clearing bank, the Bank of China official said.
“We are keen on fully taking on our role as a bridge between the Philippines and China by better facilitating RMB liquidity management and enhancing cross-border capital flows,” Deng said. “This, in turn, will attract quality Chinese direct investors who can contribute to the Philippines’s economic development by creating more job opportunities and raising the competitiveness of domestic firms.”
In October last year, 13 Filipino banks and the local branch of the Bank of China established the Philippine RMB Trading Community (PRTC) in the country.