As more proof of the burgeoning strength of Beijing's currency in international trading, the CME Group ( CME , quote ) is getting ready to accept offshore yuan accounts as collateral, with the funds to be escrowed with HSBC ( HBC , quote ).
In the article, "CME to accept Renminbi," by Robert Cookson in the Financial Times , it was reported that this would begin in January. Kim Taylor, president of CME Clearing, proclaimed, "As our business in Asia grows, we are looking at ways to provide services that fulfill the needs of our increasingly diverse customer base. We are delighted to partner with HSBC in Asia to inaugurate this new service and look forward to adding further asset types and currencies over time."
While that language is a bit of a glorified press release, the fact remains that recent developments in Europe and the United States have magnified the reach of China around the globe and its currency -- variously called the renminbi or "yuan" -- is expanding with it. Europe is looking to China to underwrite any rescue packages of its sovereign debt. And continued Chinese buying of Treasuries has lent vital support to the U.S. bond market as well.
With over $3.2 trillion in foreign reserves, much more than any other country, China is wielding its weight in international exchanges. This was covered on www.emergingmoney.com in the article, " China pulls of 'short squeeze' in manipulating copper market, again, as it also has with corn and cotton ." The more intermediaries that accept yuan deposits, the more of a force China will become. It is not good news for the U.S. dollar when other currencies are accepted -- but it is a long-term catalyst for yuan funds like CNY ( quote ) and CYB ( quote ) to gain ground.
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