Mossack Fonseca on China & Switzerland: Begin Direct Currency Trading

Monday, November 9th, 2015

With the authorization of the People’s Bank of China, the China Foreign Exchange Trade System (CFETS) announced that beginning November 10, 2015 they will launch direct trading between the yuan, also known as the renminbi (RMB), and the Swiss Franc (CHF) on the inter-bank foreign exchange market.

China is seeking to promote its yuan as a global reserve currency alongside the dollar, an ambition that depends on its willingness and ability to loosen tight restrictions on the currency’s trade.

One major step towards achieving Beijing’s goal is convincing the International Monetary Fund (IMF) to include the yuan in its internal “special drawing rights” reserve currency basket. The IMF is expected to make its decision regarding the yuan in the near future.

“This is an important step in strengthening bilateral economic and trade connections between China and Switzerland,” the People’s Bank of China said in a statement on its website. The link will help lower conversion costs and facilitate the use of both currencies in bilateral trade, it added.

The yuan can only move up or down two percent against the US dollar from a mid-rate set daily by the central bank. The Swiss franc will be allowed to fluctuate five percent on either side of a central rate, the CEFTS’s statement said.