now we know what the US-UK "special relationship" is all about

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George Osborne, Britain's Chancellor of the Exchequer, said today while in Hong Kong on a trip which will include Beijing and Tokyo, that he was working with Chinese and British banks to establish London as a new hub for the renminbi (yuan) market.  

"London is perfectly placed to act as a gateway for Asian banking and investment in Europe, and a bridge to the United States," Mr. Osborne said in a speech to the Asian Financial Forum in Hong Kong. "This is not just an accident of time zone, or our language, although both are important. 


It reflects London's strength in 


product development, 


its regulatory structure, and the depth, breadth and international reach of its financial markets." Indeed.


Osborne continued: "The government hopes that steps toward creating a Chinese currency hub in London will help strengthen the City's role as a financial center vis-à-vis New York and Hong Kong, while helping Britain attract Chinese investments in other sectors, including infrastructure."


Osborne met with Norman Chan, chief executive of the Hong Kong Monetary Authority, and other officials. 


An agreement was signed which will have Hong Kong keep their foreign exchange trading floors open for five hours longer so that trades in currency can continue while financiers in London are at work. 



In return, U.K. companies will be opened up to Asian investors, although what that means is uncertain. A new private sector forum will be set up to boost cooperation between Hong Kong and London, with European and Chinese banks including HSBC, Standard Chartered, Bank of China, Deutsche Bank and Barclays taking part.


Hong Kong is the world's biggest offshore center for the Chinese currency, acting as a gateway for the onshore market in mainland China.


Osborne also called on China to dump dollars in favor of "investments" in the U.K.: "There's an enormous accumulation of Chinese savings and a lot of those savings have ended up in investments in government debt, particularly American government debt, U.S. Treasury debt. 


I think those savings could be used in investing in British infrastructure, transport projects, energy projects and the like."