(Peter Hall – EDC)
On Monday, grumpy spring break returnees will have something to smile about: the renminbi (RMB) will step into Canada with the inauguration of the only RMB hub in the Americas, one more advance on its long march to internationalization. It all began with its first step into Hong Kong more than a decade ago. A long pause, and then a move into Southeast Asia in 2013. Then Europe in 2014. In each of these locations, the RMB’s arrival was both eagerly anticipated and ballyhooed. We know in Canada it will be greeted with fanfare, but what is less certain is whether or not Canadian exporters and international investors will take action once the celebration ends. Should they?
It sure seems so. Consider the marvel of the RMB’s rise. Simply put, we are watching history in the making. Within the span of the last five years, the RMB went from being virtually non-existent outside the People’s Republic to the fifth most used payments currency in the world as of last autumn. And there is little doubt that before long it will overtake the Japanese yen and be fast on the heels of the pound.
By comparison, the only globally significant currencies to internationalize in the last half-century were the euro and the yen. And neither one is indicative of the RMB’s future prospects. In the Euro’s case, the currencies that merged together were already hard currencies. As for the yen, it internationalized under very different circumstances – we know that Tokyo’s global aspirations for the yen, and the rest of the world’s appetite for it, were measured from the outset. Click here to read more.
Related: Canada as a RMB Hub (Toronto Financial Services Alliance)