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> Companies generally follow the law on currencies. So a London bank won't take yuan because the Chinese government says it can't. I doubt it's that simple. D
by DashRattlesnake 10y ago
> Companies generally follow the law on currencies. So a London bank won't take yuan because the Chinese government says it can't.
I doubt it's that simple. Does that Chinese currency law have any force in the UK?
I'm by no means knowledgeable about this, but I'd imagine it's more like any bank that offers yuan accounts in the UK would necessarily need to be able to do business in China to make the accounts useful, subjecting it to Chinese law. Since the Chinese government forbids the latter, the former is loses its appeal. So a London bank could take yuan if it had no Chinese presence, but it wouldn't want to.
- seanmcdirmid 10y agoNo it doesn't, but a bank that took RMB would basically be cut off from most sources that could consume RMB, like the Chinese government or Chinese companies. So they would be stuck keeping pieces of paper in a vault somewhere, hardly a nice situation to be in.
- John23832 10y agoThe value of a currency eventually leads back to the government that issued it. When I spend a Dollar, the business that gets it puts it in a bank account. That Dollar can (theoretically) be taken to the issuing bank, in this case the Fed, by the business' bank, in order to get something of value. To enforce the trading of Yuan, the Chinese we do not value Yuan held by in foreign accounts (or in the case of the "international" Yuan, it's value is restricted). So now those pieces of paper you have with Chinese lettering (or that account valued in Yuan) has nobody that gives it value... it's worthless.