London’s pre-eminence in foreign exchange is such that it doesn’t need endorsements. Yet the City will be very happy with the one it has just received: China’s official approval for London’s role as an offshore centre for trading renminbi.

With $2bn of the Chinese currency traded daily (according to HSBC), the renminbi market is minuscule next to the $4,000bn of forex traded each day globally. But renminbi trading is growing fast; that $2bn was literally zero little more than a year ago.

For London, China’s endorsement is essentially a seal of approval on its current activities and a green light to develop further renminbi services and products. The UK hosts 37 per cent of the global forex market, twice the share of its nearest rival, New York. Traders reckon that between one fifth and quarter of renminbi dealing already goes through London, with Hong Kong accounting for most of the rest. As companies increasingly settle Chinese deals in renminbi, trading in the currency will grow exponentially.

Yhe approval however has significance far deeper than a transatlantic turf war; it is another small step towards freeing the renminbi. China has recently moved more quickly towards full convertibility, inducing frenzied market excitement. Long-time market participants are revising their expectations for full liberalisation from 30-plus years to as little as five or 10. But a freely floating renminbi is not inevitable – at least, not yet. Most of China’s steps to date have been about facilitating trade. But investment flows, not trade, dominate forex flows. There are still relatively few renminbi-denominated investment products. And currency markets are wild places – just ask Switzerland. China got spooked before, in 2008, and halted its reforms. It has not yet gone so far that it cannot slam on the brakes once more.