BoC appointed Frankfurt RMB clearing hub

The bank's appointment is expected to benefit European-based mid-sized corporates trading with China.

The Bank of China (BoC) has been appointed as Frankfurt's official offshore renminbi (RMB) clearing bank after German Chancellor Angela Merkel met with the bank's president, Chen Siqing, yesterday.

Frankfurt's establishment as the Eurozone's first offshore clearing hub for RMB trade settlement will be a boost to mid-sized corporates trading within the region, according to Commerzbank's global head of cash management and international business, Frank-Oliver Wolf.

"These companies will be able to eliminate the costly need to route RMB payments via other financial centres, potentially resulting in lower costs when dealing with their Chinese counterparts," he said. "They will most likely have a time zone advantage, which will speed up the settlement of cash business."

Transparency is also expected to increase because the majority of the payment chain will be handled in Germany, according to Wolf.

The BoC was nominated in mid-June following an agreement signed by the central banks of Germany and China, declaring Frankfurt the RMB clearing hub.

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