Korea Trying to Become Hub of Yuan to Boost Financial Industry

The Financial Services Commission (FSC) has set out to turn Korea into a hub of the Chinese currency, the yuan. “The conversion may be a tough job, but it will bring Korea’s financial industry to another level once it turns out to be successful,” said FSC head Shin Je-yoon, who is visiting London for the Korea-U.K. Financial Cooperation Forum. 

The forum was held on April 1 (local time), co-hosted by the FSC and the British Finance Ministry and attended by the authorities concerned, policy finance institutions, and private-sector banking companies of both countries. The discussion topics included the vision of London as a yuan hub and its implications for Korea. 

The participants mentioned that Korea may fail to enjoy the globalization of the Chinese currency, in spite of its geographical advantage and position as China’s largest trade partner, because it has been rather passive in the competition to become the hub. In addition, they advised that Korea try to become a yuan hub based on visible trade and the real economy side rather than a finance-centered hub like Hong Kong and London. The experts also pointed out that the Korean government work more closely with the Chinese government, regarding the designation of clearing banks and qualified institutional investors and the opening of the won-yuan futures market, to revitalize yuan-based trade settlement. 

The FSC and the Ministry of Strategy & Finance agreed with the advice and decided to come up with practical measures to this end through multilateral cooperation. They are planning to respond to the internationalization of the yuan as well via various channels such as the Korea-China FTA. 

During the forum, Lord Mayor of London Fiona Woolf emphasized that President Park Geun-hye’s state visit last year added speed to bilateral cooperation in the banking sector, agreeing on the regular opening of the financial forum.