GMA Brandtalk
Tracking
Archives
Bank of China, 13 PHL banks to go into peso-renminbi trade
Bank of China Manila signed on Tuesday a deal with the Philippines’ 13 biggest banks to create a peso-renminbi trading facility in the Philippines.
Under the agreement, the Philippine RMB Trading Community will facilitate direct foreign exchange trading between the Chinese renminbi and the Philippine peso.
“The Philippine RMB Trading Community will likely lead to increased direct trade between Chinese and Philippine businesses because there will be no need to first exchange Philippine pesos to US dollars for conversion to Chinese RMB,” Bank of China Manila’s country head Deng Jun said on Tuesday.
Bank of China Manila signed the agreement with Asia United Bank, Bank of Commerce, Bank of the Philippine Islands, BDO Unibank, China Banking Corp., and East-West Banking Corp.
Also included in the group are Metropolitan Bank & Trust Co., Philippine Business Bank of Communications, Philippine National Bank, Rizal Commercial Banking Corp., Security Bank Corp., and Union Bank of the Philippines.
The community will oversee trading activities, create and implement systems, conventions, rules and regulations, and standard operating procedures on trading and settlement.
“We are now taking the first steps toward building the mechanism for the direct conversion of our currencies. The volume of business between our two economies justifies establishing this,” Finance Secretary Carlos Dominguez III said during the signing ceremony.
“The banks participating in this memorandum of agreement will set in motion the process of setting up a self-regulating organization that will oversee a transparent currency trading platform ... We anticipate a significant reduction in the cost of doing business across our two economies as a result of this,” he said.
The trading community will primarily be a self-regulated body to share ideas among its members and with the regulators, developing and adopting standards in infrastructure building, trading conventions, and other standard protocols.
China Banking Corp. senior vice president Alexander Escucha said the move will enable more yuan transactions in the country, given the current appeal of the Chinese currency.
“Just a basic platform to allow yuan transactions,” he said in a separate message to GMA News Online.
“China is already the largest economy in PPP terms (purchasing, power, parity). And with its growing role in world trade, it is only logical to set it up as an enabling platform,” Escucha noted.
The Philippine economy is likely to reap benefits from the creation of the community, said Union Bank of the Philippines chief economist Ruben Carlo Asuncion.
“It is generally favorable for the banking industry,” he said in a separate email message to GMA News Online.
“There will be opportunities as friction costs will be reduced due to the availability of this particular trading facility. Trade and tourism and other related industries will greatly benefit, i.e. between China and the Philippines,” Asuncion said.
The RMB facility is beneficial to both the Philippines and China in the long run, said former Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr.
This is something beneficial to both sides and will benefit the Philippine economy as a whole down the road, as well as contribute to the further strengthening of the economic and financial relations between the Philippines and China,” he added. —Ted Cordero/Jon Viktor Cabuenas/VDS, GMA News
