Finance Committee on Feb. 26th, 2015

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Ms. Bateman, please.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Thank you very much, Mr. Chair.

Thank you very much to all of our witnesses today.

I'm going to start with Mr. Boleat, because of your time constraints, sir.

We have a unique opportunity because we have a fairly blank piece of paper in front of us and you have gone before us in this market. What would you do again? What wouldn't you do? What advice could you give us to fully embrace this opportunity to the best advantage possible?

[Mark Boleat]

I think you need to remember our starting point. London is by far the biggest foreign exchange centre in the world anyway, and that has been an essential foundation on which we have built the work.

I think the second point is to be inclusive. In looking through the list of the 13 banks we have involved, only four of them are British. One of those, Standard Chartered, doesn't do much business in Britain. Another one, HSBC, as its name suggests, is predominantly an Asian bank. We have embraced all of the international banks; this has not been a purely British initiative.

We've been focused continually on making life easier for corporates. That's been the principal objective, to facilitate trade and investment between Britain and China; it hasn't simply been to build the numbers and to make announcements. I think we've been very successful in doing that, by engaging with corporates, knowing what they want, and engaging with as many banks and other institutions as we can.

It has been done as a pretty comprehensive exercise, gathering evidence and dealing with issues, but recognizing, as I said a bit earlier, that dealing with China is a bit different from dealing with other countries and you have to recognize the way they work.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Thank you very much. That's a very helpful response.

I want to move to Mr. Hansen.

You have clearly done a lot of advance work on this opportunity, with your papers and whatnot, and previous work.

You're not in the financial sector per se; you're not with a big bank. What's your perfect vision for strengthening our financial services sector to embrace this opportunity, and as Mr. Boleat said, perhaps enabling many international banks to embrace this opportunity with us?

[Colin Hansen]

AdvantageBC is a non-government body. It's a not-for-profit. We receive no government funding. We're funded by our members who are primarily operating in the financial services sector in British Columbia.

I think we have to be sensitive to what the market needs. The success of a Canadian RMB hub is not going to be driven by governments. It is not going to be driven by an organization like AdvantageBC. It's going to be driven by the marketplace and by the private sector. As corporations throughout the Americas see that there is a price advantage, a cost advantage, a profit advantage, they will be more attracted to bringing their financial service activity to Canada.

I think part of that is the strength that Canada has in our financial services sector. As I said earlier, I don't think we do enough to promote that. We need to go out and market Canada, certainly to the Americas, to really take full advantage of this opportunity.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Thank you very much.

Professor Curtis, I would love for you to add on to that. Also, you had such a truncated response to my colleague's brilliant question. Feel free to work that in as well.

[John Curtis]

I'll be very brief, and that is that I entirely agree with what Mr. Hansen has said.

Canada has lots of advantages, some of which we don't perhaps market as well as we might. There's a real opportunity for us and particularly for our young people. There are more young Canadians who can use chopsticks than is true in the United States or in the rest of Latin America. We are a much more internationalized society. I think it's a context in which things work, which was, I think, what Mr. Hansen was saying. That is very important. Ultimately, it's all part of the Canadian identity of being open and welcoming. As stated by Mr. Boleat, the more inclusive we appear to be and are, in fact, the more our private sector can take advantage of this within the context of all governments working well together within Canada.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Excellent.

Would you like to add to that, Mr. Osmar?

You have the unique perspective of being in the banking system and you did say this is going to have a huge impact in terms of your client services. I get that it's not a physical transaction, but I suspect the opportunity to promote greater client services is always something that you would want to embrace. How do you see doing that?

[Bryan Osmar]

Certainly the RMB hub and the RQFII is a positive in that it's both a facilitation, which will help enable those transactions to occur and an accelerant, as was mentioned in terms of branding Canada with China or the symbolism with China. So it's very positive in that regard.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

What kind of new products for your clients will the bank be...?

[Bryan Osmar]

It's early days, but some of the products on the investment side would involve accessing the renminbi qualified foreign investment pool where clients on the fund side or the insurance side, or even on the banking side, may look to find diversifying assets into Chinese equities, etc. There may be greater openness to be able to access that. Fundamentally, it's going to be a risk decision.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Could we briefly just hear from Mr. Hansen on how the bond.... You were the first government with that bond. You were a part of it. Could you just tell us the hows and whats?

[Colin Hansen]

It was about three years in the making. I was actually serving on Treasury Board when this initiative was first contemplated. We talk about the symbolism of the relationships between China and other countries. This was motivated by a desire to make a statement to China that British Columbia wants to be very aggressive as a partner in international commerce and I think we succeeded at that. The rollout of the bond was a huge success. It was oversubscribed, both the first one and the second one, and they wound up, actually, at an interest rate that was more favourable in both cases than they had anticipated when they went into it.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Wonderful, thank you.

[The Chair, Conservative, James Rajotte]

Mr. Dionne Labelle, you have the floor for five minutes.

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

Thank you, Mr. Chair. Good morning, everyone.

My first question is for Ms. Sun.

With regard to the hubs—

[The Chair, Conservative, James Rajotte]

For those of you who do not understand French, there's an earpiece.

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

Sorry for this, but I express myself better in French.

[The Chair, Conservative, James Rajotte]

Ms. Sun, since everything seems to be working, I will give Mr. Dionne Labelle the floor again.

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

Thank you, Mr. Chair.

Ms. Sun, you mentioned 11 agreements in your documents. Are those 11 worldwide agreements aimed at creating trading hubs like Canada's? Are there 11 clearing houses elsewhere?

[Nianbei Sun]

Yes. There are 11 agreements renewed by this agreement, because for the swap agreement we have an expiry date of three years. After three years, the central government will review this agreement. Now 11 agreements have already expired, and the central bank has already reviewed those 11 agreements. This doesn't mean it's only 11 agreements.

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

At this point, will our renminbi trading hub be for three years? Are we also talking about a three-year agreement?

[Nianbei Sun]

Yes, but they can renew when it expires.

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

Okay.

I assume you have a five-year strategic plan for the development of trading fields with other countries around the world. In the next five years, how many trading hubs do you plan to create to facilitate the trading of the renminbi around the world?

[Nianbei Sun]

Now, I think most important financial centres have already reached agreements with the Chinese central bank. In the future this RMB hub will be extended to certain other countries, I think especially in Europe and other countries in Asia.