A subsidiary of HSBC has claimed to be the first bank in Malta to have completed a direct trade settlement in Chinese Renminbi (RMB).

Letters of credit (L/Cs) and bank guarantees are amongst the instruments that could benefit from future direct settlement arrangements.

Local interest

According to HSBC, the interest shown by local importers trading with China in RMB has been very positive and encouraging.

The bank says local businesses are exploring the possibility of obtaining quotes in RMB for goods on order that were previously being settled in either dollars or euros.

Benefits

Customers could well benefit from using the direct settlement system, as HSBC says costs ordinarily borne by traders, such as foreign exchange charges, can be reduced and discounted.

Maltese businesses with accounts in RMB will be able to settle trade transactions in the Chinese currency through transfers and a wide range of trade finance instruments, including L/Cs and bank guarantees.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.