The European Union and China made som steps closer to each other again with the signing of Memoranda of Understandings (MoU) by both parties together with a historically first listing of renminbi-denominated exchange-traded fund (ETF) in Europe.
During the first day of talks, China Construction Bank (CCB) and European Euroclear, an international central securities depository, signed an MoU for widening the offshore renminbi capital market together. One of the aspects of such partnership are also renminbi-denominated ETFs.
Second day of talks saw ETF coming into reality. Euronext, the major eurozone’s exchange, listed its first renminbi-denominated ETF in Paris, the Commerzbank CCBI RQFII Money Market UCITS ETF. This instrument will be now available in renminbi or euros, allowing investors to the interbank bond market in Mainland China.
Another deal between Euronext and CCB saw an agreement over strategy development to improve bank’s access to European capital markets: “The possibility of [an entity of CCB] becoming a trading member of Euronext markets; easing access to Euronext products within CCB; and RMB payment and settlement structures,” according to Euronext statement. “The cooperation between the two companies will further push forward RMB internationalization, and will enable Euronext markets to become offshore RMB business centres,” Euronext added.
CEO of Euronext, Jos Dijsselhof stated: “We are delighted to welcome CCB … as investment manager on ETFs now listed on our Euronext markets. The RMB is increasingly used in cross border transactions so this is an exciting step for Euronext as we continue to develop our offer in RMB- denominated products and welcome Chinese investors to our market.”
CCB’s Chairman of the Board of Directors, Wang Hongzhang added: “Developing offshore RMB business in Europe is one of the key elements in CCB’s internationalization strategy; the cooperation with Euronext marks another important historical milestone. We believe, not only does this allow us to gain further access to the European capital markets, internationalize our operations, and provide our clients with additional channels to invest in Euronext Paris, it will also encourage an extensive use of RMB products by French enterprises, financial institutions and investors, and ultimately drive the internationalization of the RMB.”
With such steps, the eurozone only follows the trend of renminbi, becoming a global currency and reaching an improved status with higher usage with a clear goal, to became a global reserve currency.
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