Dubai: Standard Chartered was a pioneer in bringing the offshore renminbi (RMB) clearance to the Middle East and the UAE.
The bank, closely involved in making London an offshore hub for RMB trade settlements, sees Dubai emerging as a regional hub RMB clearing.
“From the way the RMB settlement has developed in Hong Kong, Singapore, Taiwan and London, we see it happening in the Middle East with Dubai emerging a regional hub. It has been a non-linier development for the RMB settlement. It starts slowly, but when it gets growing, it grows really very fast,” Peter Sands, Group CEO of Standard Charted, said in Dubai.
The GCC has been rising in stature as a major trading partner for China, with Saudi Arabia and the UAE among its top 20 major trading partners.
The growing trade and investment links between GCC and China create an opportunity for the Dubai to become a payments clearing centre for the RMB in the region.
Momentum
International banks such as Standard Chartered and HSBC are already offering cross-border trade settlements in the RMB in the Middle East.
“It is hard to predict how long it is going to take to pick up momentum. It depends largely on how it is going to be regulated and the critical mass of business that is ultimately going to be denominated in RMB. But I would be surprised if a lot of RMB transactions did not happen here in Dubai,” said Sands.
From zero level in 2010, by the end of 2013, around 15 per cent of China’s offshore trade is denominated and settled in RMB.
“We reckon that by 2020 trade settlement in RMB will in the multiple of 4 (from the current levels),” Sands said.
