Hungary and China have signed an agreement for Hungary to issue renminbi-denominated government bonds, the National Economy Ministry has said in a statement on Wednesday. The agreement was signed by Prime Minister Viktor Orbán and Bank of China Chairman Tian Guoli.
Economy Minister Mihály Varga called the signing of the Memorandum of Understanding a "milestone event", as Hungary will be the first in Central and Eastern Europe to issue renminbi-denominated bond. He said the agreement reflects confidence in the Hungarian economy and its stable growth.
The issuance will be prepared by the Government Debt Management Agency (ÁKK), jointly with the Bank of China, the ministry added.
After the signing of the MoU, Varga said Hungary strives to establish a lasting and balanced relationship with China. He reminded that the opening of a Bank of China centre in October was an important stage in such efforts.
The preparation for a renminbi-denominated bond issuance serves the same purpose, the minister said.
The Bank of China (BOC) opened a regional centre in Budapest in December 2014 and that the People's Bank of China has recently designated the Budapest branch of BOC as the region's renminbi clearing centre. Budapest has become the fifth European clearing centre for the Chinese currency, the yuan, following London, Paris, Frankfurt, and Luxembourg.
Considering Budapest’s role in the region, the advantages stemming from a rising weight of the Chinese currency in international trading may boost cross-border activity and income for both Hungary and CEE countries.
Budapest hopes the issuance will help attract more investors from Asia, especially from China.