The Bank of England (BoE) has announced, along with the People’s Bank of China, that they have agreed to extend a sterling-renminbi currency swap line for a further five years.
The maximum value of the swap line remains unchanged at RNB 350bn (£40.97bn, $54.85bn), Threadneedle Street said in a brief statement on Friday.
“The renminbi’s role in global trade and capital flows continues to increase,” Andrew Bailey, the governor of the BoE, said.
“The renewal of this swap line for five years reflects a continued commitment by the Bank of England and the People’s Bank of China to support an effective and resilient renminbi market in the City of London, reflecting its role in renminbi trading”.
The original reciprocal three-year, sterling-renminbi currency swap line, for maximum value RMB 200bn, was signed in June 2013.
Two years later, the sterling-renminbi currency swap line was renewed, when the maximum value of the swap line was increased to RMB 350bn to reflect the continued growth of renminbi trading in London.
This happened again in 2018, when the maximum value remained at RMB 350bn.
The news comes a day after the Bank said that financial institutions that clear and settle transactions will no longer be required to discuss advanced plans to make dividend payouts to shareholders.
The measure was first initiated in June last year, during the pandemic, as part of a wider series of curbs on dividends. This was to ensure firms had enough capital to survive through the health crisis.
Sir Jon Cunliffe, deputy governor for financial stability at the BoE, said in a letter to UK financial market infrastructures and specified service providers, that “these additional expectations are no longer necessary and have been removed with immediate effect”.
“We will now return to the approach in place to consider dividend payments prior to the COVID-19 pandemic,” he said.
Read more: Cheapest UK supermarket in October revealed
Earlier this year, the BoE scrapped its remaining curbs on dividends paid by banks as its stress tests revealed that lenders could cope with the fallout from COVID on the economy.
It also follows the Bank announcing that UK's interest rates would be kept at an all-time low of 0.1% last week, despite widespread anticipation it would increase the rate to 0.25%.
The UK's main interest rate has been at an all-time low of 0.1% since the pandemic began, having been set at 0.75% pre-pandemic.
Analysts have said that they expect the rate to be hiked to pre-pandemic levels in the next 18 months as the economy resumes a more steady course.
Watch: What is inflation and why is it important?