Bank of China announces first yuan cross-border settlement

Bank of China announced Monday it had carried out its first cross-border trade using the yuan, another step towards Beijing's aim of making it an international currency.

The commercial bank's Shanghai branch received the settlement from its Hong Kong unit, it said in a statement.

The payment was made to Shanghai Electric International Economic and Trading Co Ltd by an unnamed Hong Kong-based company.

Beijing announced in December it would start allowing the yuan to be used to settle international accounts on a trial basis, a move towards increasing the unit's international use and making it convertible.

Bank of China, the nation's largest foreign exchange bank, said at the weekend it signed deals with HSBC in Hong Kong and 11 other banks in the city as well as Macau and Southeast Asia to settle cross-border trade in yuan.

In addition, Bank of Communications, a Shanghai-based Chinese bank, said Monday it had signed a similar agreement with HSBC.

The agreements allow foreign banks to buy or borrow yuan from Chinese mainland lenders to settle trade in Hong Kong and Macau as part of the trial, according to settlement rules published by the central bank last week.

The same rules will apply to a planned separate yuan-settlement trial between the Association of South East Asian Nations and Yunnan province in southwestern China and the southern Guangxi autonomous region.

Bank of China was also negotiating with banks in the US and Europe about settling cross-border trade in yuan, the official Xinhua news agency reported Monday.

"We are in talks with banks in the United States and Europe and got very positive feedback. Despite some obstacles in cross-border yuan settlement, the trend is good," an unnamed Bank of China official was quoted as saying.

Source: AFP

Other news