Chinese officials hope RMB play larger role in Italian commerce

The Bank of China has of late been promoting the Chinese renminbi (RMB) as a top-level international currency in Italy.

Italy is one of the European Union's "big four" economies, along with France, Germany and Britain. But among that group, Italy plays the smallest role in the RMB's fortunes, with Paris, Frankfurt and London all being major clearing centers for the currency. No Italian city plays such a role.

Still, trade between China and Italy is important and growing quickly.

According to Teng Linhui, deputy general manager with the Global Trade Services Department with the Bank of China, trade between the two countries doubled in the past 10 years, and it shows no signs of slowing down. Teng also noted that Italy remains a top destination for Chinese tourists.

Chinese officials at Thursday's "RMB: Going Global. The Bank of China RMB Internationalization Forum" in Rome envisioned Italy playing a greater role with the currency in the future.

"This relationship will only grow in importance in the future," said Bian Jidong, country head for the Bank of China in Italy. "Compared to other countries, there is a large margin for growth in Italy."

On the international stage, the case for a more important role for the RMB -- which removed its strict peg to the U.S. dollar a decade ago -- is a strong one.

The currency is already the world's fifth most important currency, the second leading currency for letters of credit and collection, and fifth for payments. More than 50 countries are using the currency for at least 10 percent of payments, and 26 countries utilize the RMB as a reserve currency.

Despite that, the RMB is not universally convertible. Its status as a reserve currency trails not only the U.S. dollar, the euro and the Japanese yen, but also the Swiss franc and the Canadian dollar.

China's massive trade surplus (the fact that it sells much more goods and services on the international market than it buys) as well as the absence of a mature Chinese bond market and the RMB trading band, are seen as obstacles to the currency's increased internationalization.

For Bank of China chief economist Cao Yuanzheng, the big challenge is increasing the convertibility of the currency.

"If a Chinese company buys a product internationally and pays in RMB, the vendor must go to China to spend the RMB," Cao said at the forum. "So, of course, the vendor prefers to be paid in dollars or euros. For the RMB to thrive, it must address this and become more universally convertible."

Wang Hanbin, the deputy general manager in the clearing department at the Bank of China, was optimistic about the RMB's future.

"During the times of the Roman Empire, it was said that 'all roads lead to Rome,'" Wang said. "If the RMB continues to develop, perhaps we will one day say that thanks to this currency all roads will lead to China." Endit