Fri, Dec 25, 2009 - Page 11 News List

China’s central bank to greatly expand yuan settlements

AFP , BEIJING

China’s central bank said it would expand a trial for yuan cross-border settlements to the entire country, in the latest step toward making the Chinese unit an international currency.

The number of companies permitted to settle international transactions in yuan would also be increased, the People’s Bank of China said in a statement posted on its Web site on Wednesday.

The joint statement issued by the central bank and the country’s banking, securities and insurance regulators gave no timeframe for the expansion.

The move was designed in part to “spread the foreign exchange risk exposure faced by companies going abroad,” the statement said.

Beijing announced in December last year that it would start allowing the yuan to be used to settle international accounts on a trial basis.

It represented a move toward increasing the currency’s international use and making it convertible.

The government this year gave the green light to 365 firms in Shanghai and four cities in southern Guangdong Province to use the yuan to settle transactions with Hong Kong, Macau and ASEAN.

At the end of September, the value of transactions using the Chinese currency had reached more than 100 million yuan (US$14.6 million), official data showed.

However, the Bank of China (中國銀行), one of the country’s big-four state-owned lenders, said this week it had handled more than 1.1 billion yuan in cross-border trade settlements by Dec. 21.

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