China’s decision to remove the peg has caused Asian and other emerging market currencies to surge, as investors took the view that the Asian giant’s decision showed increasing confidence in a global recovery. Economists reportedly say the move will encourage central banks to be less willing to hold down their currencies against the dollar.

The country’s artificially weak exchange rate has for a long time been a major bone of contention with the US; the latter country has argued – with some justification – that the artificially low China/US exchange rate has hurt US own exporters, fuelling protectionist sentiment in Congress. Protectionism, as the world discovered in the early 1930s with the passing of the US Smoot-Hawley tariffs, is the last thing the world economy needs.

In fact, if China moves to a fully flexible exchange rate, it may also be a sign that the country may liberalise restrictions on Western firms doing business there, including wealth managers. (It would be foolhardy to bet on radical changes any time soon, however.) So far, banks need to jump through a variety of regulatory hoops to set up shop in China, usually through the route of a joint venture.

And let’s not forget that Chinese banks have also looked Westward to flex their bulging economic muscles – Bank of China, for example, has set up a private banking operation in Geneva. To some extent, Chinese banks, especially the state-owned ones, have used their massive foreign exchange earnings to go on an overseas shopping expedition. The relaxation of the yuan/dollar peg could mean the Chinese currency buys more foreign assets, although it will obviously also make Chinese exports dearer. Wealth managers take note.

The weakening of the yuan-dollar peg may not be a reason for wealth managers in Asia and elsewhere to make any quick decisions. But the move does signify that China is increasingly confident of its own economic might and the prospects for global growth.