OK, that’s the upside from the depositor’s point of view. What is the upside from the Bank of China’s point of view? Given the massive dollar reserves that the Chinese government has accumulated from its trade surplus, why should they sell off renminbi in exchange for even more dollars? If the RMB/USD exchange rate is almost certain to increase, why would the bank want to give up an appreciating asset in exchange for a depreciating one?
From the Chinese goverment point of view this is a small step (everything they do is in small steps) towards converting renminbi in a global reserve currency.
Their deep reason for that is turning Shanghai in the world's leading financial center.
US dollars, devalued as they are, are still the reserve currency of the world and most importantly, oil is still denominated in USD.
So basically they can print up as many yuan as they can sell, and exchange paper with pretty pictures on it, for oil and other commodities they can actually use.
