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The move is part of a concerted effort on Beijing’s behalf to further internationalize the Chinese renminbi, or yuan, a deliberate policy to encourage the use of China’s currency in international financial transactions.PETAR KUJUNDZIC/Reuters

Canada's Finance Minister and China's ambassador to Canada will officially inaugurate the opening of a Canadian offshore trading hub for the Chinese currency Monday, a move that will make transactions cheaper for companies doing business with the East Asian giant and could boost trade between the two countries.

The inauguration, which will feature the signing of a memorandum of understanding at the Metro Toronto Convention Centre, follows a long period of negotiations between the two governments and central banks, as well as the officials from Ontario and British Columbia. It will be the first clearinghouse for the Chinese renminbi in North America.

The Canadian hub, which follows other foreign jurisdictions such as London, will allow direct conversions between Canadian and Chinese currencies, without first changing the money into U.S. dollars – a move that will save money for Canadian firms dealing with Chinese ones and will help Canada boost its presence in the world's second largest economy.

Chinese firms sometimes offer discounts to foreign companies that are able to execute transactions in Chinese currency.

"It's a huge opportunity," B.C. Finance Minister Mike de Jong said in an interview. "It's why we've been working so enthusiastically on this project, really, I'd say for the last year and half … For businesses here in B.C., who already account for the largest share of Canada's trade with China, the opportunity to conduct trade in RMB can significantly reduce some of their transaction costs – and could lead to an expansion of their presence in that market."

One study from the Canadian Chamber of Commerce estimated that the RMB trading hub could help Canadian firms save $6.2-billion over 10 years, and potentially boost exports by as much as $32-billion. As an example, the B.C. government said that 3 per cent savings on the roughly $1.8-billion of wood products sold into China last year could see about $54-million saved.

There originally seemed to be some tension between B.C. and Ontario over which province would get the greater reputational boost from hosting aspects of the trading hub, but in recent months all parties have tended to play this down, emphasizing the national – and largely digital – nature of the exchange.

For B.C., which sends more than 41 per cent of its exports to Asia, the deal was mostly about trade finance and boosting exports; whereas for Ontario, which sends nearly 80 per cent of exports to the United States, the deal was more about reinforcing Toronto's reputation as a global financial centre.

"Certainly, the trading hub involving Toronto will improve our stature as a global financial centre," Ontario Finance Minister Charles Sousa said in an interview. "It will help build our emerging market expertise … We have a huge amount of transactions. You're looking at North American markets all looking at the financial centre of Toronto. I'm very excited."

The move is also part of a concerted effort on Beijing's behalf to further internationalize the Chinese renminbi, or yuan, a deliberate policy to encourage the use of China's currency in international financial transactions.

China has struck similar agreements in Frankfurt, London, Seoul and other global cities. This policy has also included the introduction of so-called "dim sum" bonds – denominated in the Chinese currency – in Hong Kong and Taiwan.

Mr. de Jong helped the province become one of the first Western governments to issue a "dim sum" bond, the second of which, in November, 2014, raised roughly $559-million. This is part of the province investigating various ways of boosting its profile in Asia, he said.

"This has been part of a deliberate strategy on our part to signal to … China that we are supportive of their efforts to internationalize their currency," Mr. de Jong said. "That has carved out a far stronger presence for us than a province of 4.6 million, or a country of 35 million, would otherwise get."