The U.K. government intends for Britain to become the first Western country to issue a bond in China's currency, the renminbi, said U.K. Chancellor of the Exchequer George Osborne.
At the sixth annual U.K.-China economic summit, held in London on FridaySept. 12, Mr. Osborne said the government plans to issue a RMB bond “in the coming weeks and months, subject to market conditions,” according to a statement on the U.K. government website.
The size of the bond — which HM Treasury said in a separate statement will be a one-time issuance — will be confirmed at issuance, but the statement said it is expected to be “worthy of benchmark status in the market.” That indicates an issuance of at least $500 million.
The proceeds of the bond will be used to finance the U.K. government's foreign currency reserves, which up to now have only been held in U.S. dollars, euros, yen and Canadian dollars. The statement said the announcement “signals the RMB's potential as a future reserve currency.”
HM Treasury said in its statement that the Bank of England will act as agent in managing the issuance of the renminbi bond.
Spokesmen at HM Treasury did not respond to requests for comment.
Also at the summit, it was announced that the U.K. would be included in China's forthcoming renminbi qualified domestic institutional investor program when it launches, which will allow institutional investors in China to invest into financial markets in the U.K. It will also allow RMB funds to flow to the U.K. from China.
“We need to export to fast-growing economies like China, and attract more investment to our shores,” Mr. Osborne said in the statement. “To do that, we need to make sure China's currency is used and traded here, as that will be not only good for China, but good for British jobs and investment, too.”