China has chosen London as the first overseas centre where it will open a sovereign debt market in its attempt to popularise the RMB. It will do so after launching short term debt to "lay the foundations" for sovereign debt, the Financial Times said, citing officials familiar with the matter.
"London has been chosen ahead of other financial centres in Europe and the US," one official familiar with Mr Xi’s visit told the Financial Times. "This shows that Beijing has decided that London is the preferred location in which to build an offshore centre for renminbi exchange and investment in a non-Chinese timezone."
Christine Lagarde, the managing director of the IMF, said in March that that the RMB is likely to be used more widely around the world in the aftermath of financial reforms.
Lagarde noted the "impressive efforts" made by the Chinese government in several areas: in strengthening its legal framework and its anti-corruption campaign; in curbing pollution; and "further participation in multilateral dialogue and … more international investment and trade," she said.
Chinese authorities have also expressed interest in having the RMB included in the special drawing rights (SDR) basket.
The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. Its value is based on the value of several international currencies – currently the US dollar, euro, yen and pound sterling.
The RMB became one of the world's top payment currencies early this year, according to figures compiled by the Society for Worldwide Interbank Financial Telecommunication (Swift).