Minister Luc Frieden on RMB Business in Luxembourg
Luxembourg is already today the leading international RMB centre in the euro area. The figures speak for themselves: 40 billion RMB in deposits; 62 billion RMB in loans provided by Luxembourg banks; about 39 RMB-denominated bonds listed on the Luxembourg Stock Exchange with a combined value of 24 billion RMB; about 220 billion assets under management in the investment fund industry.
Why does Luxembourg want to become the RMB Center for the Euro Zone?
Luc Frieden: The diversification and internationalisation of our financial sector is one of my main objectives. In order to do so we have undertaken a series of initiatives in Europe, the Middle East, Asia as well as in the United States. The process of the internationalisation of the Renminbi - and more specifically the role the Luxembourg financial centre can play within the euro area to support that process - is today a unique opportunity we want to seize.
The competition in the financial world for being part of the RMB trading system is very intense. How is Luxemburg positioned?
Luc Frieden: I think Luxembourg is particularly well positioned and is in fact the ideal place for establishing the offshore Renminbi centre in the euro area. The figures speak for themselves and confirm that Luxembourg is already today de facto the leading international RMB centre in the euro area: 40 billion RMB in deposits; 62 billion RMB in loans provided by Luxembourg banks; about 39 RMB-denominated bonds listed on the Luxembourg Stock Exchange with a combined value of 24 billion RMB; about 220 billion assets under management in the investment fund industry where, as you know, we are the number one in Europe and the number two in the world.
What made this impressive growth of RMB Business in Luxembourg over the recent years possible?
Luc Frieden: It is first and foremost the fruit of a constant and continuous dialogue between Luxembourg and China as well as the result of the strong determination of the Luxembourg government to further deepen economic ties and promote financial cooperation with China. Luxembourg and Chinese companies have now been closely working together for many years. The relationship between Luxembourg and China is one of mutual respect, friendship and common success. And financial services are the most recent example of this excellent cooperation. In addition, naturally the internationalisation of the Renminbi has impacted our financial centre, given the fact that the financial services provided in Luxembourg are by essence international and serve a market that largely transcends the domestic one.
Why do you think Luxembourg is the ideal place for the offshore Renminbi centre in Europe?
Luc Frieden: Luxembourg is known for its advanced economic, legal and regulatory system, as well as its very efficient financial system paired with an international dimension. Here another key element is that we already have a history and strong credentials in the Renminbi business. An important volume of investments between China and Europe has been carried out through Luxembourg during the last few years. Quite interestingly, as we have a stock exchange that is specialized in bond listings, the first Renminbi-denominated bond outside of Greater China was listed at the Luxembourg Stock Exchange in September 2011. Our banks and our financial institutions have already gained valuable experience in this area and so we did not only discover the Renminbi today. Moreover, we have 3 major Chinese banks established in Luxembourg that can promote and provide cross-border RMB services across Europe. ICBC, Bank of China and China Construction Bank have chosen Luxembourg as their European headquarters which they are using to push RMB services forward across Europe.
That’s why I think that the Luxemburg financial services centre - the number one in Europe for investments, one of the leading financial centres in wealth management and one of the countries that hosts an international clearing and settlement platform, which clears and settles millions of Renminbi transactions on a daily basis - is ideally situated to assist the Renminbi in its international development.
What are the next steps you envisage?
Luc Frieden: Our ambition is to firmly establish Luxembourg as the first and most important international Renminbi centre in the Euro Area, and the Luxembourg government will continue to lend its strong support, via the Luxembourg platform, to turn the Renminbi business into a common success from a European as well as Chinese perspective. The previously mentioned facts and figures are already quite impressive but there is a lot of potential to build upon. I have now set up a government-led task force to analyse and develop further opportunities to develop into a full-fledged Renminbi offshore centre. We will continue to work hand in hand with the various stakeholders - the regulator, the various international financial institutions the stock exchange, the government and in particular the leading Chinese banks – to make this initiative a common success for both Luxembourg and China but also for the euro area as a whole.
Source: Ministry of Finance