The Bank of Tanzania seems to let pass the establishment of yuan clearing house in the country to Kenya, at a time when China's currency is tipped to be the future global trading unit.
Though yuan, which is a unit of renminbi (RMB), internationalisation would take time. Kenya has started steps aimed at establishing the clearing and settlement house and later develops a centre for EAC.
The BoT Governor Prof Benno Ndulu said the central bank was not aware, at least at the time being, of any stage to create the clearing house in the country despite its multi advantages.
"We are not aware of efforts in place at this stage to establish an RMB clearing house in Tanzania," Prof Ndulu told 'Daily News' China office through an email. Once in place, the clearing house will allow the RMB currency to become a common settlement currency, and could in future be used for official flows such as bilateral loans or aid now denominated in dollars.
"However", Prof Ndulu said, "we are aware that Kenya has started steps aimed at establishing a suitable RMB clearing arrangement for Kenya in the first stage". The 'Daily News' wanted to know if the coming of any China commercial bank would pave the way for establishment of the said house in the country after increasing quoting of the yuan locally.
The China Institute of Contemporary International Relations, Institute of World Economics Studies, Director, Mrs Chen Fengying, said direct transactions mitigate the risks of currency exchange loses.
"Though it will take time (for yuan) to become an international currency, (but) China economic growth pushes the currency to be used as reserve currency," Mrs Chen said. She said diversification of the currency is important since it reduces the risk during exchange and balances financial markets and business when other major currencies fluctuate heavily on negative side.
According to the China'sMinistry of Commerce data, Sino- Tanzania trade volumes last year increased by over 45 per cent on either side to 3.7 billion US dollars in the favour of Beijing, where Dar share was 600 million US dollars.
The trade volume increased between the Dar and Beijing thus created a pressure for not only direct transactions but also clearing and settlement between the Bank of Tanzania (BoT) and People's Bank of China.
Tanzanians already get quotes for their currencies against the yuan. A clearing house would cut the need for dollar settlements, speed things up and reduce costs.
Though Kenya has started steps aimed at creating a clearing house, according to experts here, South Africa is best suited in Africa while Tanzania is also tipped as the conducive place for the RMB settlement backed by its longstanding ties with China. But in the mean time, the three countries are sort of competing and at the end of the day, the Chinese government is the one to decide where this clearing house to be established