France is working on setting up a currency swap line with China to boost the yuan’s presence in international trade, French President Francois Hollande said on Tuesday.
The move would follow a similar agreement between Britain and China at the weekend, the first such deal with a country belonging to the Group of Seven economic powers. A deal with France could help Paris become a centre for offshore trade in the yuan among the G7 countries, in the face of competition from London and Frankfurt.
“We are ready here in France, with Paris, to play a major role in the process of internationalisation of the yuan to encourage a better use of this currency in international transactions,” Hollande said during a meeting with Chinese business developers.
“In a few days there will, in fact, be an agreement for a currency swap line between the Bank of France and the Bank of China, and the discussions are also under way with the European Central Bank,” he added.
The Bank of France declined to comment on the matter.
Euro zone central banks can set up such bilateral agreements, but the European Central Bank’s governing council has to approve them.
In an effort to achieve greater overseas use of the yuan China has already agreed swap lines with more than 15 other countries, mostly emerging markets. ($1 = 6.1451 Chinese yuan).