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| (Xinhua File Photo) |
By Xinhua writer Wu Liming
BEIJING, Oct. 11 (Xinhua) -- China has signed a 350 billion yuan (45 billion euro) currency swap agreement with the European Union (EU), in a deal signaling the world's unshakable confidence in the Chinese economy.
The "alliance" between the Renminbi and the euro, the second largest reserve currency as well as the second most-traded currency in the world after the U.S. dollar, demonstrates the increasing status of the Renminbi and China's quickening step in internationalizing its currency.
So far China has signed currency swap deals totaling 2.2 trillion yuan(358 billion U.S. dollars) with 22 countries and regions, and the Renminbi has been among the top ten most-traded currencies across the world.
More importantly, the deal has sent a strong signal to the world that Europe is fully confident in China's economy, despite the cliche downbeat tone of previous reports by some Western media outlets.
The confidence lies in the burgeoning Chinese economy. Chinese President Xi Jinping spoke at the recent APEC summit on the topic, saying that "an annual speed of seven percent is enough to realize China's goal of doubling gross domestic product (GDP) and income per capita between 2010 and 2020."
In addition, the recently inaugurated Shanghai free trade zone is set to bring more impetus to the Chinese economy.
Furthermore, the "alliance" between the Renminbi and the euro is a win-win deal as it facilitates trade and investment and reduces risks for both sides. Several European cities are currently competing for Europe's offshore trading center for the Renminbi, so the swap deal could be regarded as a vital step EU countries are taking to suit their strategy.
There is no denying that the internationalization of the Renminbi still has a long way to go, and swap deals can not challenge the status quo of the international monetary framework with U.S. dollar at the core.
However, we believe that the Renminbi will play a more and more important role in stabilizing the international financial system, as well as diversifying the international monetary system at large.
Related:
Currency swap signed with the EU a 'landmark'
BEIJING, Oct. 11 (Xinhuanet) -- China and the European Union signed a currency swap agreement to boost trade and financial stability in a move that also marks a landmark step for the yuan's internationalization.
The three-year swap line with a maximum value of 350 billion yuan ($57 billion) is the largest the People's Bank of China has signed with a foreign central bank outside of Asia, higher than the 200 billion yuan agreement with the Bank of England. Full story
China, EU agree to 45 bln Euro currency swap
BEIJING, Oct. 10 (Xinhua) -- China has signed a 350-billion-yuan (45 billion euro) currency swap agreement with the European Union, marking a major step in internationalizing its currency.
The deal, signed between the People's Bank of China (PBOC) and the European Central Bank on Wednesday, aims to support bilateral trade and protect financial stability, according to a statement on the PBOC website. Full story
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