Offshore yuan center being created in California, says ICBC

Los Angeles signed an agreement with China’s Industrial and Commercial Bank (ICBC) to create an offshore yuan center in California as a means of boosting cross-border yuan trade.

According to a statement by the ICBC, creating an offshore RMB center in the largest state of the US would help begin structuring a better yuan trade with China.

Many other countries have already set up offshore yuan trading hubs and the US is a little late to the show.

However, according to a Chinese bank executive, the reason behind this is that the US dollar is currently the world’s dominant currency and many American firms are reluctant to accept the yuan.

China wants its currency to be used by international investors and eventually make it into a global **reserve currency.

** A reserve currency is a currency that central banks and governments across the world hold as part of their reserves.

Approximately 15 percent of Chinese trade was settled in yuan in the first nine months of 2014, a significant increase from only 1 percent in 2009.

ICB data indicates that in the first nine months of this year cross-border payments between the United States and China was over over 160 billion yuan.

The ICBC’s cross-border business was worth nearly 28 trillion yuan in the first nine months of 2014 – an 80 percent increase from the same period in 2013.

Video – LA seeks to be a trading center for yuan