A rising tide of trade and currency exchange with China will likely give a big lift to Ontario’s financial services industry.

Toronto Financial Services Alliance President Janet Ecker told QP Briefing Tuesday that the creation of a Chinese currency exchange hub in Canada, announced last week during Prime Minister Stephen Harper's trip to the country, will have many benefits. In Ontario, the traditional stomping grounds of the big banks and brokerages, the hub could be a huge boon.

The renminbi (RMB) has surpassed the Euro to become the second-most used currency in global trade finance, and the hub will make it easier for Chinese and Canadian companies to do business, says Ecker.

“It’s easier, it’s less hassle and it’s less cost and you can shave off a couple of percentage points off your cost for a deal,” she explains.

The RMB hub is really three parts: a $30 billion currency swap, a clearing bank (which would be a first for the Americas) and a foreign investor quota to buy Chinese stocks and bonds.

All of this would contribute to more trade, and more financial services work. For example: With the RMB centre in place, Chinese firms could be willing to offer discounts and longer-term deals. A study done by the Canadian Chamber of Commerce in October also projected Ontario’s exports to China would increase by over $1 billion in the next decade with an RMB hub.

And the Chinese are trying to make their economy even more consumer-driven, says Ecker.

“They’re trying very hard to build that in their economy, and that means consumer goods,” she explains. Moreover, “the financial sector benefits when trade grows,” notes Ecker.

Toronto is likely to see some of those benefits, especially considering it is home for the Big Five banks, major insurers, brokerages and the TSX. There’s also cachet that comes with being one of the first cities in the Americas to land the RMB clearinghouse. The clearing bank chosen by China is the Industrial and Commercial Bank of China, which has branches in Toronto and Vancouver.

“The Chinese banks are trying to expand here, our financial companies are expanding there,” says Ecker.

The RMB centre would also allow financial institutions to market Chinese bonds, stocks and other financial instruments. HSBC offered RMB-denominated bonds and initial public offering in the past, and says it is the No. 1 underwriter of so-called Dim Sum bonds – which are issued by Chinese companies.

“HSBC offers a wide range of market-leading RMB products and services, including payments and cash management, trade and receivables finance, and global markets solutions,” boasted HSBC President Paulo Maia in a statement. The Vancouver-based bank is forecasting Canadian exports to China will grow by 11 per cent annually over the next three years. Annual imports from China are projected to expand by eight per cent.

Current two-way trade between China and Canada hit more than $73 billion in 2013.

The province has also welcomed the RMB announcement.

“A Canadian RMB trading hub will raise Canada’s stature as a global financial centre and will facilitate economic growth and job creation in Ontario and across Canada,” said Finance Minister Charles Sousa in a statement.

“RMB-denominated products and services could develop in any financial centre in Canada and the extent to which this occurs will be determined by a variety of factors and business conditions,” added Sousa’s press secretary Susie Heath in an email. “Canada’s financial industry is headquartered in Toronto, including financial services and foreign exchange market expertise and infrastructure, which further aids the ability of Canadian firms to do business in China.”

The Bank of Canada will be monitoring the RMB clearing and conditions and keeping up discussions with the People’s Bank of China.

Renminbi hub could be yuan heck of a deal for Ontario’s financial services

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