Paris vies to be yuan hub

The French capital eyes currency swap agreement with China

Paris is vying to become a major offshore yuan trading hub in the eurozone with a view to setting up a currency swap agreement with China, according to the Governor of the Bank of France, Christian Noyer.

"The Bank of France has been working on ways to develop a RMB liquidity safety net in the euro area with due consideration of a supporting currency swap agreement with the People's Bank of China," Noyer told China Daily in a written interview.

Noyer said the launch of such a facility will encourage use of the yuan in the eurozone as a trade settlement currency as well as an investment currency.

It will also boost market confidence in the Chinese currency by reassuring market participants that yuan liquidity will remain available, even in extreme situations, he said.

Paris has been accelerating the race with London to become a leading yuan trading center for Europe after the Bank of England said in March it had signed a three-year currency swap agreement with China that will allow the British central bank to supply 400 billion yuan ($64.5 billion) to British banks.

Yuan deposits in Paris amount to 10 billion yuan, making the French capital the second largest pool for the Chinese currency in Europe after London. Nearly 10 percent of Sino-French trade is settled in yuan, according to the French central bank.

"The current level of offshore deposits and liquidity in Paris provides a good basis to foster growth in RMB products and services in the eurozone. The availability of a liquidity safety net in RMB in the euro area will further foster such growth," Noyer said.

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