Dateline Switzerland: A new renminbi trading hub will be established in Zurich, Switzerland, giving Swiss traders the ability to make and clear direct trades with Chinese traders. The deal follows shortly after a Free Trade Agreement was signed by the two countries in 2014.
The agreement suggests that a Chinese commercial bank may also establish itself in Switzerland in the coming months, since such a presence is necessary for renminbi clearing arrangements to take place.
The SNB called the agreement, which was reached on the sidelines of the World Economic Forum’s annual meeting in Davos, “a sign of fresh progress in bilateral financial cooperation between China and Switzerland“.
In July of last year, the SNB and the People’s Bank of China signed a preliminary renminbi swap agreement worth CHF21 billion. However, in the ensuing months, Luxembourg emerged as a competitor to Switzerland for RQFII status. According to analysts, Wednesday’s announcement clearly demonstrated Switzerland’s advantage over Luxembourg in this arena in the eyes of the Chinese and indicates a high level of trust between Switzerland and China.