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