Bank of England urged to back renminbi trading

Top investment banks ask the BoE to provide a swap line.

British bankers are meeting this week to discuss ways to grow the fledgling renminbi market. Investment bankers are especially keen on having BoE provide a swap line with the People's Bank of China, the Chinese central bank.

They say would shore up confidence among companies and investors who are nervous of trading the renminbi due to liquidity and confidence concerns.

A downside to renminbi trading is that the currency remains tightly controlled and cannot be traded freely outside China. Under a swap agreement, central banks agree to exchange each other's currency and can then lend the money to domestic banks to improve liquidity.

British banks are trying to convince clients to use the renminbi in anticipation of the renminbi becoming one of the world's most commonly traded currencies in the next decade.

BoE said it has been and remains fully engaged with the initiative to develop London as a centre of renminbi trading and is in regular dialogue with the PBOC on a range of issues. It noted that should it become appropriate to establish a swap line with the PBOC, it would have no hesitation in doing so in the future.