The UAE should be the Middle East's trading hub for the Chinese yuan, says the head of the Dubai International Financial Centre.
Jeff Singer, the chief executive of the DIFC Authority, said financial firms should lobby the Central Bank for changes in regulations to allow for this.
He said financial firms should join together to assist transactions using the Chinese currency, also called the renminbi, as Chinese firms were eager to enter the emirate's financial free zone.
The DIFC Authority held meetings in Beijing, Shanghai and Hong Kong last week, where it met with 250 firms eager to establish a presence in Dubai as a gateway to North Africa.
"Dubai serves as the perfect location in between Africa and China," he said at a briefing in the emirate yesterday. "You're going to see more Asian firms looking to come to the Middle East than we've seen in the past."
China is in the midst of a prolonged drive to internationalise its currency, with the intent of creating a credible alternative to the US dollar, the euro and Japanese yen as a global reserve currency.
The country's efforts to do so have been gradual because the Chinese leadership fears the effect of a rapid destablising influx - or outflow - of capital once controls are liberalised.
In anticipation of this, the DIFC has attempted to advise federal officials to speed reforms to establish the UAE as a yuan trading hub for the region. But the ultimate authority rests with the Central Bank, not the DIFC, Mr Singer added.
"If every single investment bank and every single commercial bank" were to demand to use the yuan, "the Central Bank would react to that demand", Mr Singer said.
"If the UAE decides to be a yuan settlement hub, that's an issue between the central bank of China and the Central Bank of the UAE," he added. "I think the Central Bank will [arrange] that as the market requires and the market demands."
A concentrated push by banks would make the Central Bank take the request more seriously, he added. The Central Bank declined to comment.
The use of the yuan as a settlement currency is not an immediate focus for the financial industry but it is of crucial importance to the UAE's long-term business relationships with China, said Alan Durrant, the chief investment officer at National Bank of Abu Dhabi, or NBAD, and a spokesman for the Financial Services Association (UAE), a trade group that represents finance firms.
"Look at the world today and the world tomorrow, and the world as it's going to be over the next generation - China is going to play a bigger part of that," he said. "The fact that China is gradually opening up presents enormous attractions, especially in a world where some doors are closing."
The process of internationalising the yuan is now "quite advanced", said Ashok Aram, Deutsche Bank's chief executive for the Middle East and North Africa.
Finance ministers from the Group of 20 (G20) leading and emerging economies, next due to meet in Los Cabos, Mexico, next month, are attempting to finalise a framework for yuan clearing and settlement.
"Once the G20 framework is set, six or seven other cities will set up as clearing centres for [yuan] trade flows, settlement and other transaction," he said.
In July, Singapore became the second city outside mainland China to be allowed to serve as a yuan trading centre. Hong Kong is the other, with London also seeking the same privilege.
Banks operating in Dubai including HSBC, Standard Chartered and Mashreq have begun offering business banking services denominated in yuan, while banks including Union National Bank, Emirates NBD and NBAD have opened offices on the Chinese mainland.