Concerns are being raised over London’s status as the second largest renminbi offshore centre in the world after UK’s referendum to leave the EU, known as Brexit.

As a global international financial center, London has been playing an essential role in renminbi internationalization. In 2015, London posted a daily renminbi trading volume of US$60 billion, second only to Hong Kong with with over $90 billion. London also contributed over 40% to the global FX market. Chinese banks are quick to note that the outlook is becoming unclear regarding this issue.

 “We will keep close track of the market responses and the performance of the financial market. And we will continue to support the local real economy as well as the financing activities in London, to maintain our regular business,” notes Bank of China London branch in an announcement right after Brexit.

China has four renminbi centers in Europe, which are London, Frankfurt, Paris and Luxemburg. “The declining status of London will move a lot of trades to other countries," Says Wen Bin, chief researcher of Minsheng Bank.

Western bankers share this view. Hans-Walter Peters, president of The Association of German Banks, stated that Brexit would be an opportunity for financial centers in continental Europe, especially in Frankfurt, to develop their respective businesses.

In recent years UK has signed agreements with China pertaining to currency swaps, RQFII scheme, renminbi-denominated financial products, renminbi bonds, renminbi clearing banks and overseas branches of Chinese banks. Last year, China Construction Bank (CCB) launched first money market ETF denominated and traded in renminbi listed in London Stock Exchange. It is likely that Hong Kong stock market will also benefit from the Brexit, indirectly consolidating its leading status as a largest RMB clearing center.

“In the longer term, there will be opportunities for the Hong Kong market. Because of the uncertainty about the Europe, UK, and London Stock Exchange, the money may flow to the US, Hong Kong, or the rest of Asia.” says Ringo Choi, managing Partner of EY.