However, the lack of noise from the west of the Atlantic suggests America could be missing out on important opportunities.
“As it stands, the US doesn’t really seem to be bothered with developing a renminbi hub,” says Andy Seaman, fund manager and partner at Stratton Street Capital, a London-based fixed income manager which started the first renminbi bond fund in November 2007. "Perhaps this is because the dollar is already the world’s number-one trading currency and they don’t see the need for this.
“And this will have massive implications on financial markets. While the profits in Asia and Europe will become much more profitable relative to their starting point, banks in other time zones like the US will see trading levels remain stagnant. America could be left behind.”
Arguably the most sophisticated financial centre in the world, New York would be well-suited as a renminbi hub. The US is China’s second-largest export nation just after the European Union, worth $324.5 billion in 2011. Indeed, if American importers settled their bills in renminbi, this would appease China’s goals to popularize the renminbi. And as highlighted by HSBC, Chinese exporters often give importers who settle in renminbi a discount on their payments, which would also be good for American businesses.
The renminbi is the 13th most-traded currency in the world, surpassing the use of the Russian rouble and the New Zealand dollar. HSBC has projected that the renminbi will be the third most-widely traded currency in the world as early as 2015, on par with the euro and the dollar.
Currently, the renminbi accounts for 12% of global trade but it has also been projected by HSBC that the currency will account for a third of all global trade in 2015. The renminbi is set to be a key global currency in the coming years and it would make sense for New York to take advantage of this.
However, political rhetoric is holding back the city. While cities such as London and Singapore court Beijing in their efforts to become offshore renminbi centres, Washington in recent years has slammed Beijing for its currency policy, citing its apparent under-valuation.
“You can already see the difference in trading patterns day to day,” says Seaman. “Once the London market has closed, you don’t really see much trading of the renminbi at all. Perhaps people in America haven’t really woken up to how big the renminbi is actually going to get.”
International usage of the renminbi is on an upward trajectory, as trade and settlement in renminbi becomes prevalent. In February, China overtook the US as the world's largest trading nation. While exports and imports for America came to $3.82 trillion, levels hit $3.87 trillion for China.
While China maintains its slow and steady process to internationalization and capital-account convertibility, economies all over the world are hoping to benefit from the growing use of the currency.
In April, the Reserve Bank of Australia announced it intends to invest 5% of its foreign currency reserves of AUD38.2 billion ($39.2 billion) in Chinese government bonds, the Reserve Bank of New Zealand is in negotiation with China to make its currency directly convertible and France has announced its interest in implementing a swap line with Beijing. Renminbi deposits in France are the second-largest in Europe after the UK.
And as the rate of take-up in renminbi payments increase, the use of the currency in investors' portfolios will follow a similar pattern.
Indeed, for Seaman, investing in Chinese local bonds provides diversification within a risky emerging market environment. “The bonds have a low correlation with other global bond markets, attractive risk adjusted returns, with the added benefit of renminbi currency appreciation,” he says.
According to research carried out by Stratton Street, the renminbi will double in value during the next decade, appreciating at a 7% annual rate on average. “The currency is already up 3.5% this year, showing itself as one of the world’s strongest currencies," says Seaman. "And the pace of appreciation is accelerating: the renminbi hits 19-year highs against the dollar nearly every day.”