George Osborne was in ebullient mood last week as he greeted the news that China Construction Bank had been designated the official clearing bank in London for the renminbi. “The number of historic changes in our financial world are few,” the UK chancellor of the exchequer said, adding that he wanted “the City to facilitate that change and be central to it”.

The development gives London the infrastructure to compete with Hong Kong and Singapore, which until now had the offshore market in the Chinese currency more or less to themselves. London’s slice of the market is currently Rmb15bn (￡1.5bn) – a mere drop in the ocean of the City of London’s capital markets. But optimists are seeing parallels with the development in the 1950s of a London-based eurodollar market, which allowed the US currency to be held outside the American financial system and helped propel London to the centre of the financial universe.

The eurodollar market was a reaction to exchange controls imposed in 1957 amid a crisis of confidence in Britain’s economy. The rules prevented the use of sterling for trade between parties outside the UK, threatening to diminish the role of the City’s banks. In response, some London banks began accepting dollar deposits and using them to fund dollar-denominated loans to clients in Britain or abroad. The new market was a commercial initiative rather than a regulatory one – although monetary and financial authorities on both sides of the Atlantic chose not to interfere.