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The Rise Of The Yuan Continues: LME To Accept Renminbi As Collateral


As far-fetched as the notion may be to those who are wedded – by choice, by misguided beliefs, or by virtue of being completely beholden to the perpetuation of the status quo – to idea that the dollar will forever retain its status as the world’s reserve currency, the yuan is set to play a critical role in global finance, investment, and trade going forward.

We’ve long argued that the BRICS bank, the AIIB, and to an even greater extent, the Silk Road Fund, will help to usher in a new era of yuan hegemony in international investment and trade. A number of recent developments support this, including Beijing’s push for the renminbi to play an outsized role in loans doled out through the AIIB, the denomination of loans from the BRICS bank in yuan, and China’s aggressive investment in Pakistan and Brazil via the Silk Road initiative (here and here).

As for financial markets, China recently confirmed the impending launch of a yuan denominated gold fix which conveniently dovetailed with the LBMA’s acceptance of the first Chinese banks to participate in the twice-daily auction that determines London gold prices.

Now, in the latest sign of yuan proliferation and penetration, the renminbi will be accepted as collateral by the LME along with the dollar, the euro, the pound, and the yen.

Here’s WSJ with more:

China’s domestic stock market may be in turmoil but the country’s currency, known as the yuan or renminbi, is making a seemingly relentless push deeper into the global financial system.


The latest step: the London Metal Exchange, the world’s largest venue for trading metals where $15 trillion of metals was traded last year, is set to accept yuan as collateral for banks and brokers that trade on its platform.


The Chinese currency joins the U.S. dollar, the euro, the British pound and Japan’s yen, which are all currently permissible as collateral on the LME’s platform.


“In the commodities area, it makes absolute sense to start providing renminbi-denominated services,” said Trevor Spanner, chief executive of the LME’s clearing house business. “The renminbi is on its way to becoming one of the world’s most widely used currencies” he said.


While largely a technical change, the LME move marks another milestone for China’s currency.


The yuan is now the fifth most used currency for international payments, ranking number seven a year ago, according to data from the Society for Worldwide Interbank Financial Telecommunication, a provider of payments services.


A Bank of England survey on Monday showed that trading in yuan rose 25% in London in the six months to April this year, even as trading volumes in other currencies fell by 8% on average over the same period.

The takeaway: irrespective of any damage China’s recent interventions into its domestic equity markets may have on the country’s SDR push, and regardless of whether the PBoC cash injection into CSF spooks the market and serves to accelerate short-term capital outflows, the internationalization of the yuan isn’t likely to be meaningfully derailed.

We’ll leave you with the following quote from Dan Marcus, CEO of London-based currency trading platform ParFX who spoke to WSJ:

“The rise of China’s currency on global markets is arguably the most significant development in currency trading since the introduction of the euro in 1999.”



11 Comments on "The Rise Of The Yuan Continues: LME To Accept Renminbi As Collateral"

  1. Makati1 on Tue, 28th Jul 2015 8:04 pm 

    Do you hear the clock ticking? The one that counts down the remaining time until the dollar is sidelined in the world of trade and the Empire loses it’s last leg of support. I do. Tic tic tic …

  2. Rodster on Tue, 28th Jul 2015 8:32 pm 

    Yay I can’t wait for the Eastern Banksters. They will save us all. After all they have done exactly the same thing as the Federal Reserve and the US Gubmint in trying to keep their markets from imploding.


  3. Rodster on Tue, 28th Jul 2015 8:38 pm 

    At least China can turn those ghost cities and factories into prisons when the SHTF and their citizens come after those in charge with pitchforks.

  4. apneaman on Tue, 28th Jul 2015 8:42 pm 

    Rodster, they got a lot of history with that sort of thing. It’s like a tradition.

    List of rebellions in China

  5. apneaman on Tue, 28th Jul 2015 8:47 pm 

    Here is the last major non partisan American street protest.

  6. Davy on Tue, 28th Jul 2015 9:40 pm 

    Mak said “Do you hear the clock ticking?” Yeap and its China’s end game. China will not have the resources to be the dominant world power so many have crowed about lately. China will just be another major power with serious problems only at a much greater scale. Poor Makster bet on the wrong horse.

  7. Davy on Wed, 29th Jul 2015 6:39 am 

    Folks, I have been here a long time on PO. For the past 2 years the Makster has been crowing the end of the US and how Russia and China are going to steamroll the US into a third world country. Look at what’s going on with China and Russia in the links bellow. I am of the opinion that the whole global system is going down. The US is a part of that and can’t escape it. Only someone with half a brain would claim any winners to this situation.

    Obviously Mak has ulterior motives. He does not care about the truth of the situation only that there is someone anyone out there that can destroy America. What a brainless moron.

  8. paulo1 on Wed, 29th Jul 2015 7:03 am 

    re Davy’s: “I am of the opinion that the whole global system is going down.”

    I agree with this and don’t see a way to avoid it. Right now, it seems every headline is a bubble gum patch, with CB duct tape and hose clamps.

    Obviously, to avoid violent revolution domestic obligations to citizens will have to be somehow rolled into the change as well as draconian measures. I just wonder if the Bankster Squids have already written the plans and drawn up the blueprints for it and given it to our ‘Dear leaders’. I also wonder how much of the skim they plan to take from the reset.

    Hopefully, one day there might be an ‘open season’ on the pricks.

  9. Davy on Wed, 29th Jul 2015 8:20 am 

    Paulo, someone said somewhere “In crisis is change”. I have a feeling we are close to significant changes good and bad. The most important will revolve around food and transport.

    Food and transport will become insecure and unstable in any kind of crisis. It is the degree and duration that is the important point. How stressed will our society become? Degree and duration are the critical issues of food and fuel. This is why we need mitigation and adaptation policies at all levels.

    We can influence the effects of our fall but not the fall itself. The fall itself is baked into the cake. Since society is influenced at all levels by cornucopian execeptionalism believing in progress through technology and development we should prep at the personal level. You can manage the bad effects of the fall. Take measures into your own hands.

  10. Makati1 on Wed, 29th Jul 2015 11:12 pm 

    paulo1, the ‘open season’ starts whenever the sheeple turn off their TV, get off their fat asses and get out in the streets with pitchforks and guillotines in sufficient numbers to be effective. It doesn’t happen any other way. I don’t see it ever happening in the US. Too lazy. Let the other guy do it…

  11. Davy on Thu, 30th Jul 2015 6:19 am 

    And more news for Mak:\

    Looks like someone picked the wrong time to ditch the dollar and load up on gold.

    Mak, let’s review your agenda now. Lol. No I am not flag waiving because a dollar too high or too low is no good for anyone except the speculators. I just love how Mak-agenda is like a drunk pissing in the wind.

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