An interesting article published on a US blog details the advantages (and disadvantages) of opening a yuan-denominated bank account abroad. We have previously discussed on this blog the increase in offshore renminbi funds and deposits. The author recalls his conversation with the staff at the Manhattan main branch of Bank of China, which makes fascinating reading.
Opening a savings account in renminbi abroad appears easy enough. However, an account holder cannot write cheques (neither denominated in yuan nor in other currencies), cannot withdraw Chinese currency from his or her account (neither abroad nor in China), cannot use debit or credit cards to pay for goods or services in China and cannot deposit currency on the account outside of the country where it has been opened.
All that an account holder can do (at the moment) is to deposit US dollars into the account, and benefit from the higher interest rate and likely currency appreciation of the yuan (estimated to be 3% to 5% per year over the next few years) to withdraw a higher US dollar amount over a period of time.
Basically, this appears to be yet another successful Chinese export – and quite a neat way for the Chinese authorities to capture a share of US taxpayers’ savings.
And the best thing: the account is even insured by the US government’s Federal Deposit Insurance Corporation!