London is set to become an offshore trading centre for Rmb after chancellor George Osborne signed a deal with the Hong Kong Monetary Authority this week.

Osborne agreed technical measures with Norman Chan, Hong Kong Monetary Authority chief executive, to help increase the status of Rmb as a global currency. As a result, the pair will set up a forum to operate clearing and settlement systems, market liquidity and development of new Rmb-denominated products between the two regions.

Commenting on the deal, Stuart Gulliver, HSBC’s chief executive tells GTR that “successful cooperation will support British businesses as they look east to the opportunities in Asia while supporting Asian businesses looking west to Britain as a natural home for trade and investment”.

Ashutosh Kumar, Standard Chartered’s global head of corporate cash and trade, transaction banking, says there has always been an interest among UK-based corporates to settle business with China in Rmb and believes that the recent announcement will continue to encourage trade between the UK and Asia.

“UK-based exports into China (that exceeds 90 days tenure) that are Rmb-denominated will not fall under the foreign debt quota, thereby making it easier to facilitate trade. Not only will corporates mitigate currency risks when engaging in Rmb-denominated trade settlement between the regions, they will have a larger time window to settle the transaction in Rmb as well,” Kumar explains to GTR.

Meanwhile, Sam Ford, head of risk solutions at Barclays says that China’s importance as a global trading partner means more and more British businesses are looking to trade with the country. “So any agreement which makes it easier to trade in the local currency is welcome news.”

“Over the last two years we have seen increasing interest from British firms to use the Rmb when settling trade transactions. I suspect that the announcement will only accelerate that trend due to the benefits businesses may receive when doing business in China,” Ford says.

Another factor that will continue to raise the Rmb standing as a global currency is the recent decision made by the Hong Kong Monetary Authority to extend the Rmb payments system operating hours by five hours – a move that will inevitable increase offshore trading between China and the UK.