Portugal’s Finance Minster, Mario Centeno, could oversee Portugal becoming the first eurozone country to issue government bonds in ‘renmimbi,’ the currency of China.
"It's a way to broaden our investor base and attract funding," Centeno said at the end of a three-day visit to China.
In addition to meeting with the China’s central bank, the minister had meetings with the republic’s top financial institutions including the Agriculture Bank of China and the Postal Savings Bank of China.
China, the world’s second largest economy after the US, holds the largest foreign exchange reserves on the planet, worth §3.1 billion.
Centeno’s plan required Portugal’s sovereign debt credit rating to nudge above the embarrassingly low point it holds, thanks to Moody's, Standard and Poor's and Fitch which have kept Portugal in the ‘junk’ category.
Portugal needs to get to BBB (low) to access Chinese money and to leave the shackles of the Excessive Deficit Procedure.
This is expected to happen "before the summer," according to Portugal’s ever-smiling Prime Minister, António Costa.
China’s perceived love affair with Portugal is based on the purchase of substantially undervalued, cash generative infrastructure companies and the acquisition of powerful stakes in Portugal’s ailing banking sector as well as investments in insurance and healthcare.
Beijing will welcome the move by Centeno as it wants to spread its wealth beyond its shores and to see the renminbi used internationally in metals and oil trading.
In October 2016, the renminbi formally joined the International Monetary Fund currency basket, an instrument created by the IMF to allow liquidity to member countries.
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What is the difference between the yuan and the renminbi?
There essentially is no difference. The renminbi is the official currency of the People's Republic of China, and translates to “people's money.” Its international symbol is CNY (or CNH in Hong Kong; but abbreviated RMB, with the symbol ¥).
