Dóra Daróczi- Szilárd Erhart and Péter Kálmán: Next Renminbi Hub to be Established in Budapest

Following Asia, so-called renminbi hubs are being set up in Europe as well. After Luxembourg, London, Frankfurt and Paris, the next one will be established in Budapest. The symbolic foundation stone of the Budapest renminbi hub was laid by the People’s Bank of China (PBC, the central bank of the People’s Republic of China) and the Magyar Nemzeti Bank on 27 June 2015 by signing a Memorandum of Understanding on clearing and settlement in Basel at the headquater of Bank for International Settlements (BIS).

The renminbi hubs provide clearing and settlement infrastructure necessary for the transactions carried out in renminbi outside China, and making use of the Chinese financial liberalisation measures, they may offer an increasingly wide choice of financial services to a growing clientele. First typically the settlements related to foreign trade and tourism increased in the hubs, but FX market and bond market activities are also gaining importance in a number of renminbi hubs, including Singapore, London and Luxembourg. Prior to setting up the financial background infrastructure and services of renminbi hubs, renminbi initiatives were announced. The launching of the Budapest Renminbi Initiative in March 2015 was proposed by the MNB, following the example of the Bundesbank, the Bank of England, Banque Centrale du Luxembourg and Banque de France.