A hub would allow companies in Canada to convert currency directly into yuan, rather than changing money into U.S. dollars first, saving money for firms and bringing added business to Canada’s financial sector.STRINGER/TAIWAN/Reuters
Ontario and British Columbia are pressing the federal government to step up its efforts to land a Chinese currency trading hub.
In a letter from the provincial finance ministers to their federal counterpart, Joe Oliver, obtained by The Globe and Mail, the provinces reveal they have also set up a joint committee of government officials and finance-industry representatives from both provinces to manage the creation of a potential hub for the yuan.
"A Canadian RMB [renminbi] trading hub will raise Canada's stature as a global financial centre and facilitate increased trade and investment with China, thus benefiting the entire Canadian economy," Charles Sousa and Mike de Jong wrote.
The missive is intended to give Ottawa added clout in talks with China's central bank, as well as to encourage the federal government to push harder for a hub, Ontario government sources said.
The letter is silent on which city would host an yuan hub, lauding both Toronto and Vancouver, suggesting the two provinces have put aside their differences for the greater good of presenting a united front behind Ottawa's negotiations with the Chinese. The joint committee will include top civil servants from both provinces' finance departments, as well as the CEOs of the Toronto Financial Services Alliance and AdvantageBC.
A spokesman for Mr. Oliver said the federal government welcomes the provinces' support for an yuan hub. He had no update on the talks.
"We don't want to build expectations up," Nicholas Bergamini wrote in an e-mail.
A hub would allow companies in Canada to convert currency directly into yuan, rather than changing money into U.S. dollars first, saving money for firms and bringing added business to Canada's financial sector.
Ontario Premier Kathleen Wynne, on a trade mission to China this week, has raised the issue with Chinese officials and bankers. Among others, she has met with Assistant Commerce Minister Tong Daochi and representatives of the China Investment Corporation, the country's sovereign wealth fund.
"We believe that [a hub] will save traders $3-billion in currency costs over 10 years and, in fact, could open $32-billion more trade between our two countries," she said in a meeting with representatives of several Chinese banks at a Beijing hotel Friday.
At least three of the banks – the Bank of China, the Industrial and Commercial Bank of China and the China Construction Banks – vying to be the clearing house for yuan in Canada. All of them welcomed Ms. Wynne's pitch.
Ding Yuan, a senior manager at China Construction Bank, said the prospect of a Canadian hub is one of the bank's most important businesses.
"We are taking part in the establishment of an offshore RMB market, and we hope we can get your support," Ms. Ding told Ms. Wynne.
Adrian Morrow