On July 21 2014, the Swiss National Bank (SNB) and the People’s Bank of China (PBC) have signed a bilateral swap agreement.
The swap agreement enables renminbi and Swiss francs to be purchased and repurchased between the two central banks, up to a limit of 150 billion renminbi, or CHF 21 billion. This will allow liquidity in renminbi and Swiss francs to be made available to the relevant markets as required. The swap agreement is a key prerequisite for the development of a renminbi market in Switzerland.
In addition, the SNB has been granted a renminbi investment quota, which it can use to invest part of its foreign exchange reserves in the Chinese bond market.
This swap agreement is an important step towards a renminbi trading hub in Switzerland. Switzerland is a leading global center for Private Wealth Management and could become a top location for Chinese Banks wishing to expand into this field.
Together with the Swiss – Chinese Free Trade Agreement, which entered into force on July 1 of this year and the new Double Tax Treaty between Hong Kong and Switzerland that entered into force in October 2012, Switzerland is now a top headquarter location for Chinese/HK companies as an ideal gateway to Europe.
Chinese Banks interested in starting operations in Switzerland can now rely on interesting business opportunities for renminbi clearing in Switzerland.
- Swiss National Bank Press Release
- Factsheet: Switzerland-China FTA
- State Secretariat for Economic Affairs