Thank you, Mr. Chair.
Thank you very much for inviting me to participate in this committee.
As a representative of Montreal's financial services industry, let me share our views on the implementation of a renminbi trade centre in Canada. Overall, we are very positive about establishing a renminbi trade centre in Canada. Canada and China have long-standing relationships. Those historic ties are deep and represent a very good foundation on which we can continue to build, notably in the financial services industry.
The internationalization of the renminbi represents an opportunity to write a new chapter in the bilateral relationship between Canada and China. In our view, there are two main areas that will be impacted by this major development.
First, Canadian companies will be able to trade directly in renminbi with their Chinese business partners. This should increase commerce between our two countries and increase the competitive advantage of Canadian companies versus those of other countries due to lower foreign-exchange costs.
Second, Canada's financial services industry, including that of Montreal and the province of Quebec, will be able to create and distribute financial products in renminbi. This will generate a new line of business for financial institutions, provide new investment opportunities for institutional and retail clients, and further increase the profile of recognition of the expertise found within Canada's financial services industry.
The Canadian renminbi trading centre will also benefit China, whose economy is shifting from being oriented to the production of manufactured goods towards favouring national consumption and global investment in strategic industries. With a renminbi trading base in Canada, China will have direct access to North and South American financial markets that operate within the same time zones. The Chinese will also benefit from a solid financial system in Canada with its world-class expertise, proven legal framework protecting investors and consumers, and a favourable fiscal regime.
I would like to add that increasing financial relationships between Canada and China isn't just a bet on growth. It's also an investment in change. Change in the way we do business together. Change in the vehicles allowing access to Chinese markets. Change in the behaviour of Chinese and Canadian finance professionals as they become more accustomed to the practices of one another. To summarize, it's an investment in a more collaborative future between our countries and financial communities.
Finance Montréal supports Toronto and Vancouver in their will to act as the main Canadian hubs of renminbi trade. As Canada's biggest financial centre with most of the foreign exchange operations, Toronto has the capacity and the know-how to handle a significant share of the renminbi transactions and their clearing activities in Canada.
Vancouver, for its part, as the Pacific gateway to Asia, is also very well-positioned. It has a substantial Chinese-speaking population and British Columbia has an incentive program that exempts foreign exchange trading from provincial taxes. B.C. also took the lead in the renminbi market in November 2013, becoming the first provincial government to launch a "dim sum", or renminbi-denominated bond, worth nearly $425 million.
Now, what specific role can Montreal play in establishing and operating an offshore renminbi market in Canada?
In Quebec, there are about 150,000 jobs in the financial services industry, out of which 100,000 are located in Montreal. The GDP of the financial services industry amounts to 6.2% of the province's total economic output. Montreal is ranked 18th in the world in the Global Financial Centres Index. In 2008, Montreal was 31st in this global ranking. So the local industry has performed well since the crisis and the volume of international business has increased in Montreal over the last few years.
Montreal wants to play an active role in putting in place and operating a renminbi trading centre in Canada. On top of creating and distributing financial products in renminbi, Montreal's financial community will play a specific role in the renminbi market: on the derivatives side. As the Montréal Exchange is the derivatives trading hub for Canadian securities, renminbi derivatives created by financial institutions will be traded in Montreal. Our city is specialized in this cutting-edge area of financial services.
Renminbi futures or currency swaps will diversify the offer of products traded on the Montréal Exchange, while increasing its international appeal.
Montreal has a special relationship with the city of Shanghai, which has been its sister city for nearly 35 years now. One example of the close collaboration between Montreal and Shanghai is a partnership signed in 2013 between Finance Montréal and the Shanghai Financial Association. This deal will increase exchanges of students and professionals of our financial services industries, particularly in the derivatives trading sector.
In 2013 and 2014, representatives of Finance Montréal visited the newly created Shanghai free trade zone, which was designed to facilitate the international trade of goods and services. It was also conceived to increase investment and financial liberalization, including full convertibility of the renminbi, which will further open up the banking sector.
These personal ties and direct contacts between Montreal's and Shanghai's financial communities could be leveraged and further increased by the new renminbi trading centre in Canada. We also see an increasing interest from Chinese banks in opening up branches in Montreal, such as the Bank of China, which opened its first office in 2013. Industrial Bank of China has also announced its intentions to open its first branch in Montreal in 2015.
The Canadian renminbi trading centre could accelerate the penetration of the Montreal market by Chinese financial institutions, a development which we support. All these elements bode well for the financial relationship between China and Canada and also for Montreal, as part of Canada's financial community.
It is now up to us as a nation to seize the opportunities that will arise from this renminbi trading centre and thus further develop a win-win partnership with our Chinese counterparts.
Thank you.