Britain will become first Western government to issue an offshore bond in China’s renminbi currency, finance minister George Osborne said on Friday, deepening efforts to build financial links with the world’s No.2 economy.
News of the bond came after Britain announced 2.4 billion pounds ($3.9 billion) of commercial deals with China, coinciding with Chinese Vice Premier Ma Kai’s visit to London.
“I can now announce that the UK government intends to be the first national government outside of China to issue a bond in China’s currency,” said Osborne, speaking alongside the vice premier as part of an annual meeting on finance and investment involving the two countries. “We have issued bonds in U.S. dollars before. Now we will issue a bond in renminbi.”
Osborne also said Lloyd’s of London insurance market had been granted a license to open a branch in Beijing, days after Britain granted the Industrial and Commercial Bank of China a wholesale banking license. Osborne said the renminbi bond would be similar in size to a 2 billion renminbi bond issued in London by China Development Bank.
The finance ministry said it expects the bond to be issued before the end of the year and that it will be used to finance the government’s reserves of foreign currency.
Britain has been keen to attract Chinese banks and offshore trade in the yuan to bolster its position as the world’s main center for foreign exchange trading. In March, Britain and China signed an agreement to set up a clearing service for renminbi trading in London, which is competing with Luxembourg, New York, Paris and Frankfurt to become the top Western offshore yuan center. (1 US dollar = 0.6162 British pound)