UK, China Sign Historic $33 Billion Currency Swap

June 26, 2013

(FTMDaily.com) – The Bank of England has just announced it has signed a three year currency swap arrangement with China worth 200 billion Yuan ($33 billion).

As the world’s currency trading capital, London has long been courting China in an attempt to gain a foothold in the expanding global use of the Chinese currency, the Yuan. The plans for the U.K.-China currency swap were first revealed last February by Bank of England Governor, Mervyn King.

According to a statement recently released upon the finalization of the new deal, King said: “In the unlikely event that a generalised shortage of offshore renminbi liquidity emerges, the Bank will have the capability to facilitate renminbi (Yuan) liquidity to eligible institutions in the UK.”

So far, China has already agreed to currency swap lines with more than 15 other countries around the globe.

Earlier this year, it was announced that China had created similar currency deals with Pakistan and Australia

Consider these news headlines demonstrating the aggressive nature of China’s monetary hopes:

China, Russia to dump US dollar for bilateral trade

China-Japan Currency Deal Points Way to New Monetary Order

China, Singapore Double Currency Swap Agreement to $48 Billion

China and Brazil sign $30bn currency swap agreement

France plans currency swap line with China

China and Australia in currency pact

South Korea to use currency swap with China for trade settlement

China announces currency swap with Pakistan

China, Hong Kong Expand Currency-Swap Pact to $63 Billion

Why is this important?

What makes this currency swap arrangement with the United Kingdom so important?

It is the first currency deal that China has been able to secure with a G-7 country. In essence, the Yuan has entered the big leagues. China continues to grow its global monetary influence at a breathtaking pace. It is almost as if the People’s Bank of China is making preparations to replace the U.S. Dollar as the global reserve currency.

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