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ICBC (Thai) set to cash in on growing role of yuan as transaction currency

Cites China's growth potential, five-year plan; yuan-clearing bank on the cards

With a view towards expanding financial transactions between Thailand and China and the potential of the yuan, also known as renminbi (RMB), in becoming the common means of making transactions, the Industrial and Commercial Bank of China (ICBC) plans to open a yuan clearing bank and introduce yuan products in this country.

"The biggest motive for RMB internationalisation is the growth potential of China's economy and the Chinese government's five-year plan is for the RMB capital account to be fully open by the end of 2017," Yanni Li, head of RMB cross border business management, said yesterday.

"By that time, the yuan will become an international currency and China's policies will be ready for it," she said.

Over the past two to three years, the yuan has appreciated by almost 10 per cent and is becoming more stable, so its use as a local currency for investment and trade would benefit both Chinese and Thai companies, Li said.

China and Asean countries are in close proximity and the primary bases have already been established, so only a little preparation is needed for yuan internationalisation in this region.

The trade scope and volume between the two parties are also growing bigger.

"From international trade alone, China gave more yuan to this market and the region is very important, especially for yuan liquidity in the local market," she said.

When Thailand gets its own yuan clearinghouse in the not too distant future, it will be very valuable for the country because it can rapidly increase trade with China, she said. ICBC is keen to be the one to launch it here.

"I believe that it will be less than two years, and ICBC is willing to be this clearing bank," she said.

Zhigang Li, chief executive officer and executive director of ICBC (Thai), said the most popular products for Thai customers are yuan credit and debit accounts.

Thais studying in China can withdraw yuan from ICBC's automated teller machines there without transaction fees and ICBC's exchange rate for the baht is the best among commercial banks in China, he said.

"ICBC is developing new yuan products for our Thai customers and now Thai companies can get yuan guarantees and customers can match or cross currencies with other currencies such as the US dollar, baht and yuan.

"In the near future we will have a yuan credit account for our Thai customers," he said.

Then Thai customers can apply for a yuan credit card and use it to pay in baht in Thailand. They can also pay in baht their charges from using the card in China.

"The yuan potential in the region means that we can expect a China settlement bank in Thailand and the yuan market will be established here this or next year," he said.

Globally, renminbi settlement for cross-border trade rose from 2.9 trillion yuan two years ago to 4.6 trillion last year.

In the first half of this year, it was 2.7 trillion yuan.

The yuan ranked seventh as a world payment currency by the end of April. It became the eighth most traded currency last year, according to a survey by the Bank for International Settlements.


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