LONDON (Reuters) - Britain is teaming up with Hong Kong to secure London a top spot as an offshore trading centre for the Chinese currency, as the UK aims to boost trade and investment ties with fast-growing Asian markets.
In a speech at the Asia Financial Forum on Monday, Britain’s finance minister George Osborne also urged countries to fight protectionist tendencies and repeated Britain’s willingness to add further funding to the International Monetary Fund (IMF).
Speaking only days after ratings agency Standard & Poor’s downgraded a number of euro zone countries including France, Osborne applauded progress made by the euro area though he urged further actions to restore sustainable finances and growth.
Britain’s coalition government has launched a drive to expand trade and investment ties with major developed and emerging economies outside Europe to lessen its dependence on trade with the crisis-hit euro zone.
“I believe that we can make Britain the home of Asian investment and Asian finance in Europe,” Osborne said, according to the text of his speech, which kicks off his official program during a trip to China and Japan.
The British government’s aim was for London to complement Hong Kong in becoming a major offshore centre for the yuan, the Treasury said in a press release.
Britain’s finance ministry and the Hong Kong Monetary Authority (HKMA) would facilitate a private-sector forum to explore synergies, specifically looking at clearing and settlement systems, market liquidity and the development of new products denominated in yuan.
Britain won the Chinese government’s backing for London to become an offshore trading centre for the yuan last year.
Osborne welcomed a recent announcement by the HKMA that it will significantly extend the operating hours of its yuan payments systems to better accommodate European transactions, making it easier for transactions in London to be settled.
London would join other centers, including Singapore and Taipei, which are vying for a share of the growing offshore yuan business. But all are expected to have to play second fiddle to Hong Kong as Chinese authorities push on with a series of initiatives to internationalize the currency.
Osborne will meet the finance ministers and central bank governors of China and Japan as well as Japanese Prime Minister Yoshihiko Noda and investors during his trip aimed at strengthening ties in financial services, infrastructure and innovation.
Britain is close to recession again as the government’s tough spending cuts aimed at erasing the huge budget deficit bite and the crisis in the euro zone - its main trading partner - weighs on exports and business confidence.
“The euro zone has made progress in recent months, in particular the provision of liquidity to banks by the ECB,” Osborne said. “But of course there remains more to do, as the euro area itself acknowledges.”
The international community had to make sure that the IMF had the tools and resources to promote global economic stability, Osborne said.
Last week, Osborne said Britain may increase its contribution to the fund together with major non-European countries such as China or Japan, but ruled out higher contributions if they were earmarked to prop up the euro zone.
“The IMF does not belong to any one region of the world,” Osborne said in his speech. “Its role is to support countries which get into difficulty, not currencies.”
Presenting his international agenda for 2012, Osborne vowed to push for trade liberalization, using “new and innovative alternative approaches” as the World Trade Organization’s global approach was stuck at a “significant impasse”.
Britain would also work to ensure that global standards for financial regulation would be implemented, he said, repeating his rejection of a financial transaction tax on a European level, which France and Germany have been seeking.
Reporting by Sven Egenter; Editing by Dale Hudson