Frankfurt issues first bond backed by Chinese currency

This means Germany has shifted to China. BRICS will grow, so will Russia and China.

By Kevin Cote
and Danhong Zhang
2 May 2014

China’s currency was once so immovable nobody saw much sense in owning it. But the more Beijing loosens its grip, the more investors want to get their hands on it. The rags-to riches currency now comes to Frankfurt.

Frankfurt is joining London, Singapore and Hong Kong in the fast-moving market for bonds denominated in the Chinese currency, the renminbi. Germany's KfW development bank announced it was issuing a two-year bond with the volume of 1 billion renminbi at the Frankfurt Stock Exchange.

The development underpins Frankfurt's bid to become a key offshore center for facilitating trade transactions and investments in renminbi. It is also the latest success in Beijing's drive to internationalize its once tightly-controlled currency, which is also called yuan.

Top ten currencies

China first authorized the sale of bonds denominated in yuan in 2007. They are called “Dim Sum” bonds after the bite-sized delicacies in Chinese cuisine. But they have become a huge boost to the popularity of the currency. The Society for Worldwide Interbank Financial Telecommunication says the renminbi is now among the top ten most-used currencies for global trade payments, overtaking the Swiss Franc to occupy position seven in February.

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