IN support of a growing local renminbi market, Bank of China Manila has been officially established as the RMB Clearing Bank of the Philippines, the bank said in a statement. The designation comes following the initial memorandum of understanding signed by the People’s Bank of China (PBOC) and the Bangko Sentral ng Pilipinas (BSP) in 2018.
As the designated clearing bank for RMB business in the Philippines, Bank of China Manila can process the settlement of accounts and other core RMB services such as remittance, foreign exchange, liquidity support and banknotes for the local participating banks. It can also provide local market participants with access to mainland China’s CNY onshore rates as an alternative to the more accessible CNH rate. (CNY is the RMB rate that can only be traded on-shore—in mainland China—or through Clearing Banks appointed by the PBOC internationally.)
By making it easier to trade with counterparties in mainland China, Bank of China Manila can help improve the economic and trade partnership to promote development between Philippines and China.
On January 16, 2021, the Ceremonial launch of RMB Clearing Bank in the Philippines operated by Bank of China Manila was held at Shangrila The Fort in the City of Taguig. H.E. Wang Yi, State Councilor and Minister of Foreign Affairs of China, and Chinese Ambassador Huang Xilian, together with Bangko Sentral Governor Benjamin E. Diokno and Foreign Affairs Secretary Teodoro L. Locson Jr., unveiled the launch.
“We’ve seen tourists, traders, and investors grow more confident in using the currency in the local market,” Bank of China Manila Country Head Deng Jun was quoted in the statement as saying. “As we work towards growing the market even further, this establishment will help us provide more focused RMB services to all the local participating banks.”
He further thanked the PBOC and the BSP for their great support and guidance in establishing the RMB Clearing Bank in the Philippines.
The Philippines is one of the fastest growing RMB markets in Southeast Asia. In June 2020, data from the Society for Worldwide Interbank Financial Telecommunication, or Swift, network showed the Philippines ranked first in the region in terms of growth rate of RMB clearing volume this year, ahead of countries like Singapore, Indonesia and Malaysia.
The total volume of RMB cleared in 2020 was CNY 447 billion, a 133.8 percent increase compared to 2019’s total of CNY 191 billion.
The BSP also welcomed the establishment of the RMB clearing bank.
Diokno said that the establishment of an RMB clearing bank in the country is an important step in the currency diversification of the local market.
“This opens up a lot of opportunities for local business in the easing of transactions and reducing the cost of settlement between Philippine and Chinese companies,” the central bank chief was quoted in the statement as saying. “As we further diversify the currency basket in the local market, we move towards an environment with more choice, and that is good for business.”
Diokno further thanked Bank of China for this contribution to the development of the financial markets of the country.