Dubai: DIFC (Dubai International Financial Centre) is in initial talks with the People’s Bank of China to set up a renminbi offshore market to tap into enhanced trade and investments flows, a DIFC official said on Monday.

“We are in active dialogue with the People’s Bank of China and the Chinese financial community to make Dubai as a renminbi clearing hub. There is a greater linkage and cooperation on both sides to enhance trade and investments,” said Chirag Shah, chief strategy and business development officer at DIFC, adding “the discussions are in the initial stage”.

In 2013, the renminbi entered the Bank of International Settlements top 10 most traded currency, contributing to 2.2 per cent of total forex volumes.

“There are different ways of facilitating usage of renminbi here. Given that we have four large Chinese banks present here. We are able to provide an infrastructure an option for businesses to use these banks to facilitate renminbi as the usage in currency,” he said.

Most of the banks already offer renminbi-based accounts through the network they have with Chinese banks. DIFC is allowed to do business in any currency other than dirhams including the renminbi.

“The banks are able to support the clearing of renminbi by infrastructure here but the settlements happen in Beijing. China is also building for 2015 a payment system in Beijing for global clearing in renminbi in China. We will work on both those plans and facilitate the development of renminbi clearing in the region,” Shah said.

Dubai through the DIFC, which has the top four Chinese banks, is well positioned to support the development of renminbi currency.

“We are clearly seeing a high level of interest in usage of renminbi as a currency for trade, investments and reserve currency. The usage of renminbi will the one of the biggest development in the world of international finance,” he said.

Recently, Hong Kong listed a $1 billion (Dh3.67 billion) sukuk on Nasdaq Dubai.

By the end of the first half of 2014, the total value of sukuk listed on Dubai’s exchanges was close to $22 billion, out of this Nasdaq Dubai alone accounted for more than $18 billion. Currently Dubai is the world’s third largest venue for sukuk listings by value.

Important gateway

“Dubai has become an important gateway for trade tourism, aviation, logistics and financial services. When we started DIFC 10 years ago, 80 per cent of the firms came from Europe and the US, today that number has reversed, we effectively have half of our population still coming from the US and Europe, but a predominant portion comes from Middle East and Asia,” Shah said.

The companies have been cashing on the trade and investments flows happening between East and West.

Asian trade used to contribute to 10 per cent of the trade in the Middle East about 10 years ago, today it stands at 40 per cent, according to Shah.

“Dubai is a gateway for not only connecting East and West, and East and West with this region. It’s a bit like Emirates airlines, wherever Emirates fly that’s where business is,” he said.

DIFC supports all financial institutions from all over the world to do businesses in the Middle East, Africa and South Asia.