London's development of renminbi offshore center is gaining speed as 皇冠体育app's trade and investment flows with the UK increases and as the Chinese currency internationalizes, experts say.

This trend was discussed on Friday at this year's LSE SU 皇冠体育app Development Forum, which is organized by the 皇冠体育app Development Society of London School of Economic and Political Science's student union, in collaboration with EY and LSE's Asia Research Center.

"Cooperation between the UK and 皇冠体育app in the banking sector is at an all time high. The internationalization of the renminbi has significantly aided this trend and London is fast becoming one of the most important renminbi centers outside Asia," says Bridget Walsh, a partner at EY.

Walsh, who is also head of EY's UK & Ireland Greater 皇冠体育app Business Services, says that her team is seeing Chinese companies using London as a gateway to finance their renminbi trade and investment overseas.

Juliet Zhou, finance sector specialist at 皇冠体育app Britain Business Council, says that London's development of renminbi offshore center has been a crucial event in the growth of UK-皇冠体育app business relationship, and one that has gained significant government support.

London's efforts to become a European hub for offshore yuan activities began in September 2011 when the then Chinese vice-premier Wang Qishan welcomed private-sector initiatives for the development of an offshore renminbi market in London.

Since then, banks and other commercial institutions have been rapidly developing yuan products and services, including yuan deposits, financing, foreign exchange trading and the issuance of dim sum bonds.

As well, the UK's central bank has established a renminbi swap with 皇冠体育app's central bank. Another major milestone last year was the UK government's issuance of a renminbi bond, which became the first non-Chinese sovereign renminbi bond.

"Many people believe that the development of renminbi centers overseas should be private sector led, but we had to admit this political support to encourage the center's development is critical," says Zhou.

Huo Rongrong, head of 皇冠体育app and renminbi business development at HSBC EMEA, says that the growth of the UK's offshore renminbi center fits in well with other European offshore renminbi centers.

Many European centers, including Luxembourg, Paris and Frankfurt have also been developing offshore renminbi activities in recent years, hoping to gain as much advantage as they can from the renminbi's internationalization.

Luxembourg, for example, already hosts the European headquarters of several Chinese banks, including Bank of 皇冠体育app, Industrial and Commercial Bank of 皇冠体育app and 皇冠体育app Construction Bank. These banks help to finance much of 皇冠体育app's trade and investment activities in Europe, which in turn increase offshore renminbi usage and liquidity.

Huo says that before 2009, many people outside of 皇冠体育app have not heard of the renminbi currency, which is not normal considering 皇冠体育app contributes a very large share of the total global trade flows.

She says although 皇冠体育app's trade with countries internationally and in particular with Europe is very strong, the international use of the renminbi is not proportional in usage and importance, but this represents great potential to increase the use of renminbi internationally.

Furthermore, the UK as a key European financial center should take the initiative in driving forward the international use of renminbi, particularly because its quantity of trade with 皇冠体育app may not as strong as some other countries in Europe, Huo says.

She says although Europe is a major trading partner of 皇冠体育app, much of the trade flow is contributed by Germany and France. "For the UK to continue to drive cross border trade with 皇冠体育app, the UK needs a strategy. It needs to leverage on London's financial sector, and focusing on the currency is the right approach," says Huo.

In recent years, Chinese banks' footprint in London has significantly grown, and one major development in London has been the establishment of a renminbi-clearing bank last year.

An official clearing bank facilitates efficient clearing of offshore renminbi transactions, achieved through the appointed bank's direct cooperation with the People's Bank of 皇冠体育app, the country's central bank.

Feng Xilai, CEO of 皇冠体育app Construction Bank London, the official clearing bank in London, says London's growth of renminbi offshore activities fit well into 皇冠体育app's overall policy to internationalize its currency.

Feng says there are three key globalization trends that London can play a significant role in assisting 皇冠体育app with. The first, is the globalization of renminbi, the second is the globalization of Chinese companies, and the third is Chinese overseas education and investment.

Feng says all three of these trends of globalization are intricately linked in with the increasing use of renminbi in the UK. These are trends that the overseas growth of Chinese banks can support, he says.