The experiment in full yuan convertibility through the new free-trade zone in Shanghai will boost transaction volumes in offshore foreign exchange centers like London and Hong Kong that have been accumulating yuan deposits, not render them redundant, according to the Lord Mayor of the City of London. Roger Gifford, visiting Hong Kong to promote London’s competitiveness in global finance, said anything that made the yuan easier to trade would benefit existing offshore deposit centers. “I do not consider Shanghai’s new free trade zone experiment a threat to London, Hong Kong or any other city,” he said. “The more centers to trade the yuan, the bigger the global pie of the yuan business. The experiment in Shanghai will help boost international investors’ interest in trading the currency and benefit all offshore yuan trading centers”, he said. The decision to allow Shanghai a freer yuan flow has led some analysts to warn the end may be nigh for Hong Kong and other offshore yuan hubs. Gifford rejects such concerns, saying the experiment in free convertibility shows China is keen to move in the direction of a freely convertible currency in the longer term, which will only boost interest in the yuan. Gifford said London, as an international foreign exchange trading center, would be a major center of yuan business. London last year saw a 100% increase in yuan-denominated trade financing to CNY33.6 billion, with a substantial increase in the volumes of a range of yuan-deliverable instruments. Spot yuan trading volumes increased by 240% over 2011, reaching a daily average of USD2.5 billion. The volume of yuan-denominated letters of credit (LCs) and other loan guarantees grew 13 times to CNY4.7 billion. In June, the People’s Bank of China (PBOC) and the Bank of England agreed to a three-year currency swap line of up to CNY200 billion.