London must open its arms and welcome the Chinese currency

To maintain its dominance, the City must become the off-shore trading centre for the Chinese yuan, says Matthew Lynn. And that means beating off the competition.

What's the greatest opportunity for the City right now? Russian initial public offerings? Investing in emerging markets? Both have their place, but the really big opportunity is getting relatively little attention: becoming the offshore trading centre for China's currency, the yuan.

The yuan is fast emerging as a credible alternative reserve currency to the dollar. As that happens, offshore markets for trading and investing all that money will emerge. The City should be able to become the main European yuan hub and possibly the global hub as well. But it has a fight on its hands. The Germans are already eyeing the market. So are the Swiss, and no doubt the French will try to muscle in. If the City wants it, it will have to fend off the competition.

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Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.