The Financial Times reports that a growing number of international banking institutions have begun to encourage corporations doing business in China to accept payment in local currency, instead of the US dollar or euros.
The paper last week reported on the efforts of a number of major international banks to persuade customers to accept the renminbi, including Citigroup and JPMorgan. HSBC has moved its chief executive officer from London to Hong Kong in support of the effort. That bank, along with Standard Chartered also have begun to provide a number of financial incentives to companies that agree to settle their trades in the renminbi.
A year ago, China introduced a pilot project for companies to use the renminbi outside the country. Initially, only a small number of Asian nations were included, but Beijing has subsequently expanded it worldwide.
Since China has become the world’s second largest economy, banks are moving to establish their place in the Chinese market and take advantage of its expanding economic influence. The Financial Times reported that the Hong Kong special administrative region will be the focal point for offshore transactions in the renminbi.
Questions: What are the implications to the global cotton supply chain if more companies adopt a renminbi settlement?
Is this something more companies should consider?
How would it affect your company’s operations?