##minbi by having an offshore market, which clearly sets the renminbi apart from other freely tradable currencies? the chinese government established the offshore renminbi market to expedite the transition from being a currency purely intended for trading to an investment currency. by taking this roundabout approach, china is able to establish its currency internationally and protect its domestic financial system at the same time, until the government deems the capital market to have sufficient breadth and depth for a complete liberalisation. from demand side, china ’ s growing economic importance and its manifold trade and investment relationships has led to a steadily growing need around the world for renminbi transactions. due to the capital controls still in place, the only opportunity to participate in the internationalisation of the renminbi is via the offshore market. offshore centres : opportunities for frankfurt as a financial centre in the past, the internationalisation of major currencies always coincided with the growth of a country ’ s economic power. in the 19th century, between 60 % and 90 % of international trade was conducted in british pounds. after the second world war, the us dollar overtook the pound as the most important investment and reserve currency. in 1999, the euro followed in the footsteps of european currencies and with that the deutsche mark. today, the euro is the second most important investment and reserve currency after the dollar. given china ’ s growing economic importance, the internationalisation of the renminbi seems long overdue. the chinese government has been actively promoting this process since 2009. the unique separation of the onshore and offshore currency market, in particular, will facilitate the transition from a currency purely intended for trade to an investment, and potentially, a reserve currency. the chinese government chose hong kong as the first offshore centre but limited the volume of liquidity allocated to the market. almost 80 % of offshore renminbi trade is currently settled in hong kong. 6 based on the positive experience to date, china plans to extend the currency ’ s offshore market. after the positive experiences with hong kong, other financial centres are now becoming more important for the renminbi, too. since july 2012, around 4 % of renminbi trade has been conducted both in london and in singapore. 7 singapore and taipei have both been strengthened by the appointment of a chinese commercial bank as a clearing bank for renminbi transactions in their respective financial centres. frankfurt, too, is trying to establish itself as a renminbi trading centre in europe

the dollar peg and fixed the renminbi ’ s exchange rate to a trade - weighted currency basket. the widening of the fluctuation range in april 2012 from + / – 0. 5 % to + / – 1 % further advanced the process of liberalising the exchange rate. despite the global financial crisis, china ’ s real economy continued to grow strongly even after 2008. and since 2009 in particular, china ’ s continued high current account surpluses have led to a further expansion in its foreign currency reserves. summing up at this stage, it is clear that the internationalisation process of the chinese currency is taking place more gradually than was the case with the deutsche mark, which, at times, was subject to radical upheaval, such as the collapse of the bretton woods system and the ems crisis in the early 1990s. although the us dollar has been the most commonly used currency for china ’ s trade up to now, use of the renminbi has increased a great deal over the last few years. between 2010 and 2012, the percentage of trading transactions settled in renminbi has jumped from virtually zero to around 12 %, and is likely to increase further. 4 as a result of the currency ’ s hsbc global research, the rise of the redback ii ( marz 2013 ). swift rmb tracker ( mai 2013 ) : abrufbar unter : http : / / www. swift. com / products _ services / renminbi _ reports. swift ( 2013 ) : the complicated path of rmb internationalisation, abrufbar unter : http : / / www. swiftinstitute. org / newsletters / the - complicated - path - of - rmb - internationalisation. bis central bankers ’ speeches growing use in foreign trade, international renminbi deposits in hong kong have also increased considerably to over 670 billion renminbi ( approximately eur 83 billion ). 5 to come back to my question at what stage is the renminbi now? we can ascertain that the renminbi has already achieved the first step and become a trading currency. because of the capital controls still in place, the renminbi is currently in transition from being a pure trading currency to being an investment currency. while both inward and outward direct investment is now possible, portfolio investments will continue to be regulated. nonetheless, china intends to further develop existing initiatives in this area. what opportunities will be opened up to china and the ren