Xinhua Business — RMB clearing bank launched in Canada

The renminbi (RMB) clearing bank in Canada, ICBC Canada, was officially launched on Monday evening. This is the first RMB trading hub in North America and in the western hemisphere.

China.org.en
RMB clearing bank launched in Canada

Reuters — Exclusive: China's international payments system ready, could launch by end-2015

China's long-awaited international payment system to process cross-border yuan transactions is ready and could launch by year-end, Reuters reports, citing sources with direct knowledge of the matter. 

Payment System (CIPS) will open the way for the yuan to go international and increase its global usage by cutting transaction costs and processing times.

"The CIPS is ready now and China has selected 20 banks to do the testing, among which 13 banks are Chinese banks and the rest are subsidiaries of foreign banks," said a senior banking source who is involved in the matter. 

"The official launch will be in September or October, depending on the results of the testing and preparation," the source added....

Reuters

Exclusive: China's international payments system ready, could launch by end-2015 - sources
Michelle Chen And Koh Gui Qing

Zero Hedge — De-Dollarization Continues: China-Argentina Agree Currency Swap, Will Trade In Yuan

Links (Reuters, Bloomberg) are provided on this one.

Zero Hedge
De-Dollarization Continues: China-Argentina Agree Currency Swap, Will Trade In Yuan

Tyler Durden

Jens Petersen — The Impossible Trinity

The Impossible Trinity

But why does it have to be so complicated? Why bother to establish offshore RMB hubs? Wouldn't it be more feasible simply to remove the capital controls? The answer to these questions can be traced back to what economists have dubbed "The Impossible Trinity". Ideally a country's central bank would like to be able to (1) fix a country's exchange rate, (2) allow a free capital flow, and (3) lead an independent monetary policy. However, in praxis this is hardly possible and the central bank will have to forfeit one of these three items. While countries such as the United Kingdom and United States of America largely have relinquished their exchange rate controls to maintain free movement of capital and an autonomous monetary policy, the Chinese government chose to sacrifice the free cross-border flow of capital to keep a fixed exchange rate and control money supply.

The Impossible Trinity also highlights the connection between China's recent moves to lessen capital controls while expanding the daily trading band of the RMB. China may be at a point where it needs to let capital flow more freely in order to facilitate a more efficient distribution. A prime example in this regard is the country's overheated real estate market, where considerable amounts of Chinese have put their savings due to the lack of alternative investment options. Allowing Chinese companies and individuals to invest more freely abroad could not only help China to deflate some of the domestic asset bubbles, but could also deliver some of the much needed capital for struggling western economies like the ones of Europe.

Furthermore, if Chinese investors and enterprises were less constrained with regards to outbound investments, the People's Bank of China - China's central bank - would be less dependent on buying US treasury bonds and could thereby more easily diversify its holdings into other asset classes. The extra outbound investments would most likely cause the RMB to depreciate against the Dollar. In fact, this process may already have begun, as China's stock of outbound investments continues to increase while its foreign exchange reserves slowly are starting to decline. This development has so far been accompanied by two percent depreciation of the USD/RMB exchange rate since the beginning of May 2012. 

Conclusion

China may have a long way to go before it can claim a truly international currency. Meanwhile, the primary obstacles to convertibility are associated with capital accounts restrictions and lack of access to the Chinese capital markets. The ability to raise capital and hedge risk is consequently restricted.

Caijing.com.cn
Chinese Currency Controls and the Liberalization of the Renminbi
Jens Petersen,China Briefing