China - British deal = "adios" Euro !!!

China and Britain have reached a three-year deal to swap their currencies when needed, the first such agreement between Beijing and a major developed economy and a move that could help boost the Chinese Yuan outside Asia.... In a statement released late Saturday, the Bank of England said Governor Mervyn King and his counterpart at the People's Bank of China, Zhou Xiaochuan, signed an agreement to set up a three-year swap line with a maximum value of 200 billion Yuan ($32.6 billion). It means that Bank of England could draw on the line with the PBOC when there is a sudden shortage of Yuan funds in the U.K. market—and make the Yuan, also known as renminbi, available to banks under its jurisdiction.  China's central bank has increasingly used such bilateral currency-swap deals in its effort to promote the Yuan in global trade and finance. So far, the PBOC has signed nearly two trillion Yuan worth of currency-swap deals with some 20 countries and regions, including Hong Kong, Thailand, Singapore, New Zealand, Argentina and Malaysia. Most of the pacts so far have been with emerging economies in the Asian-Pacific region and don't include major economies such as the U.S., Japan and those in the euro zone. These currency lines, though rarely tapped, could enhance foreign investors' confidence in trading of the Yuan. An expansion of Yuan trading into London could help China advance its goal of turning the Yuan into an international currency, a key part of its broader push to open up its financial system. Currently, Beijing maintains a tight leash on cross-border fund flows, making it difficult for the Yuan to accumulate overseas. Chinese officials in recent months have increased their rhetoric toward making the Yuan a freer currency, hinting that a plan on Yuan convertibility would be proposed later this year and include steps aimed at allowing freer flows of its currency and ways to let Chinese individuals make overseas investments. Some scholars within China expect the Yuan to become basically convertible as early as 2015, though Chinese officials have never given a timeline for how soon that would occur. The timing would depend on progress in China's efforts to overhaul its creaky financial system and open its capital account—efforts that could be slowed if China's economy sputters or its financial system hits turbulence.  U.K. and European bankers as well as the politicians are counting on the Yuan to help cement London's role as the center for global foreign-exchange trading. This comes as cities such as Singapore, Tokyo, Taipei, Luxembourg and Kuala Lumpur are all exploring the possibility of becoming offshore Yuan trading hubs—a status only the Chinese.