The U.S. took an unprecedented step toward allowing trading and clearing of the Chinese yuan in America.
Finance and industry leaders said Monday they are setting up a group aimed at allowing U.S. institutions to make or receive yuan payments, according to a press statement released before the International Monetary Fund said it will add the currency to its Special Drawing Rights basket. The road map will be subject to review by U.S. authorities, with the aim of lowering transactional costs and helping build stronger trade and business partnerships, they said.
This “will improve the competitiveness of U.S. companies, increase market transparency and accrue direct benefits to the U.S. economy,” the group said.
Formation of the working group comes after U.S. President Barack Obama and China’s President Xi Jinping agreed in Washington in September to further strengthen the financial cooperation between the two nations. Michael Bloomberg, the founder and majority owner of Bloomberg LP and a former New York mayor, will chair the group and Mary Schapiro will serve as vice chair, while Thomas Donohue, Timothy Geithner and Henry Paulson will co-chair.
A string of financial centers have tried to set up yuan trading hubs outside China, a step that would help the world’s second-biggest economy integrate further into global financial markets. Monday’s announcement came as the IMF decided to add the yuan to its basket of reserve currencies effective in October 2016. Inclusion gives IMF member countries who hold it the right to obtain any of the currencies in the basket -- currently the dollar, euro, yen and pound -- to meet balance-of-payments needs.
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The working group will also include the following member institutions:
* The U.S. Chamber of Commerce
* Bank of America Corp.
* Bank of New York Mellon Corp.
* Citigroup Inc.
* Goldman Sachs Group Inc.
* JPMorgan Chase & Co.
* Morgan Stanley
* Wells Fargo & Co.
* Agricultural Bank of China Ltd.
* Bank of China Ltd.
* Bank of Communications Co.
* China Construction Bank Corp.
* Industrial & Commercial Bank of China Ltd.