The Global Renminbi Solutions of Deutsche Bank.
What is the difference between a Reserve currency and a Trade currency? What is the difference between a currency value and an exchange rate? How did China's onshore CNY currency devaluation affect the offshore CNH valuation via NDF non-deliverable forwards denominated in US dollar? In contrast to the key role of offshore markets in the rapid expansion of RMB FX markets, opportunities to hedge RMB interest rate risk may depend on developments in onshore markets - not least because most RMB bonds are held by domestic investors.
Since , the Chinese authorities have accelerated the process of financial reform through currency internationalisation, capital account opening and the gradual liberalisation of domestic interest rates. The internationalisation of the RMB has outpaced other areas of financial reform, entering an accelerated phase from , with new clearing banks appointed in financial centres across Asia, Europe, Canada, Africa and Latin America.
Since the first pilot scheme to allow cross border RMB trade settlements was established in , and expanded to include all Chinese provinces and global counterparties in , the redenomination of cross-border trade to RMB has grown rapidly with a slight step backwards in The RMB is now fully convertible on the current account, but also across an increasing number of items on the capital account. Accordingly, corporations, investors and financial institutions have a growing variety of channels and instruments available to transact in RMB, whether in China or in a growing number of offshore Locations.
Redenomination of cross-border trade in RMB may bring efficiency improvements, reduced transaction costs and discounts in some cases. The recent relaxation of regulatory restrictions makes it easier for multinational companies to manage cash across borders and move funds from their China operations for inclusion in their regional or global liquidity pools.
Chinese policymakers have also continued relaxing capital account controls to allow more direct and portfolio investment flows into and out of China. Meanwhile, a variety of structures and solutions are now available for companies to raise funds in RMB markets, ranging from debt issuance in the offshore RMB bond market to offshore RMB borrowing by registered entitites in the Shanghai Free Trade Zone and elsewhere in China.
The most significant recent milestone in the liberalization of portfolio investment flows was the launch of the Stock Connect programme in late, initially linking the Hong Kong and Shanghai stock exchanges with plans to eventually cover the Shenzhen Stock Exchange and additional asset classes.
Even with an economic slowdown, China will remain a powerhouse in global trade. Additionally, the increasingly important domestic market is absorbing a growing share of Chinese manufacturing output. From a longer term perspective, China will remain a growth engine for the world economy, albeit with a changing composition in supply and demand drivers.
The key milestones can be found here. Furthering its commitment to the asset management business in China, Deutsche Bank made a The RMB has rapidly emerged as a corporate treasury management currency, enabling companies to reduce costs, improve efficiency, manage risk and enhance access to China.
Deutsche Bank offers a comprehensive range of products and services to address client demands for global treasury management using the RMB. Our key capabilities include local, cross-border, and offshore RMB payments and collections, RMB cash management solutions; current and time deposits, and paperless cross-border payment services.
RMB accounts and associated products are available in a number of global locations, while our FX4Cash platform allows clients to leverage existing local currency accounts to access a broad range of solutions for cross-border payments. Deutsche Bank can also facilitate cross-border intercompany lending in RMB.
We work closely with our clients and regulators to remain at the forefront of various pilot programs that are broadening the scope for cross-border business. Deutsche Bank is able to answer all questions concerning payment transactions to and from China. Below we provide an overview of the most important regulations that you need to comply with to ensure your CNY payments can be processed quickly and securely, allowing you to concentrate on your core business.
RMB — Payments to and from China. Deutsche Bank provides a suite of products to serve the onshore and offshore RMB payment needs of financial institutions via our Hong Kong and Shanghai branches. Our experienced customer service team possesses a full understanding of the regulatory requirements for RMB payments, and has a track record in ensuring efficient payments processing and the swift resolution of inquiries.
Deutsche Bank is a market leader in financial institution payments and has been ranked the top provider of liquidity to global and Asian FX markets for the past seven consecutive years Euromoney Global FX Survey - Deutsche Bank can provide a variety of structures and solutions for companies to raise funds in RMB markets or through inter-company channels.
We offer RMB overdrafts and working capital loans in China as well as fixed asset loans and project financing. Our strong global network of banking relationships enables us to realise large-scale syndication opportunities across a range of RMB loan products.
We have been involved in the offshore RMB fixed income market for clients including local and foreign corporates, financial institutions and public sector institutions. Our specialists worldwide can structure, arrange and serve as book running manager for RMB fixed income transactions.
Deutsche Bank's ability to offer a broad range of products and services is significantly enhanced by its involvement in Zhong De Securities Company Limited, a joint venture between Deutsche Bank and Shanxi Securities Co. Zhong De received a business license from China Securities Regulatory Commission CSRC in , which allowed the company to commence investment banking services in China's attractive domestic securities market.
Deutsche Bank provides a full suite of custody services from pre-trade to post-trade. We are also able to partner with our global markets and fund management businesses to provide a one-stop-shop solution encompassing product design, ETF market making, offshore RMB FX conversion and liquidity and bond execution services.
Deutsche Bank has always been highly committed to the development of RMB markets through all facets of foreign exchange, credit, equities and equity-linked products, exchange-traded and OTC derivatives and structured products. As a leading global FX bank, we can offer key currency crosses with both onshore and offshore RMB across multiple time zones.
Deutsche Bank's dedicated CNH trading desk manages a significant amount of daily trading volumes, while regular, dedicated research serves to keep investors and corporates informed of the latest developments and trends shaping the market. We participate in the China interbank bond market, enabling you to capture higher yields, diversify your portfolio and manage liquidity more effectively. Offshore option trading also declined significantly. Diminished turnover in onshore forwards may have been related to reserve requirements on forward transactions, which were instituted in August to discourage speculation in the RMB after a period of exceptional volatility.
The growth in these instruments, while still relatively small, has paralleled the growth of RMB deposits outside China, another component of China's capital account liberalisation Graph A2 , centre panel. Both on- and offshore, RMB interest rate derivatives markets remain less developed than their FX counterparts. In comparison with the markets in advanced economies, the depth of the interest rate derivatives market remains very limited Ehlers and Eren This suggests that the issuers and holders of RMB bonds, mainly Chinese residents, may not be actively hedging the underlying interest rate risks.
In contrast to the key role of offshore markets in the rapid expansion of RMB FX markets, opportunities to hedge RMB interest rate risk may depend on developments in onshore markets - not least because most RMB bonds are held by domestic investors.
Read more about our central bank hub. Statistics BIS statistics on the international financial system shed light on issues related to global financial stability. Read more about our statistics. Banking services The BIS offers a wide range of financial services to central banks and other official monetary authorities. Read more about our banking services.
Direct linkage with CNAPS and one of the widest clearing networks in China Best in class online banking, web based globally used tool with state of art security standards Best ERP Integration capability in China, over 80 group clients implemented, majority using our in-house SAP interface program First bank to embed the FX conversion for cross currency payments into our payment platform db direct internet Effective liquidity management:
Central bank hub The BIS facilitates dialogue, collaboration and information-sharing among central banks and other authorities that are responsible for promoting financial stability. The most significant recent milestone in the liberalization of portfolio investment flows was the launch of the Stock Connect programme in late, initially linking the Hong Kong and Shanghai stock exchanges with plans to eventually cover the Shenzhen Stock Exchange and additional asset classes.