China designated a clearing bank in Seoul for yuan transactions in South Korea on Friday, coinciding with a visit by Chinese President Xi Jinping (習近平), as Beijing promotes greater use of its currency overseas.
China’s central bank has authorized the Bank of Communications, the country’s fifth-largest lender, to undertake yuan clearing business in the South Korean capital, the People’s Bank of China said in a statement.
The announcement came as Xi wrapped up a state visit to South Korea on Friday. China is seeking to make the yuan used more internationally in keeping with the country’s status as the world’s second biggest economy behind the US.
A joint communique endorsed Thursday by Xi and South Korean President Park Geun-hye also pledged to strengthen efforts to launch direct trading between the yuan and the won.
The People’s Bank of China recently announced that it signed agreements for yuan clearing arrangements with France and Luxembourg, adding that Chinese banks would be designated later as the clearing institutions.
Before that, it named the Bank of China as the clearing bank for yuan dealings in Frankfurt, Germany, and the China Construction Bank in London. China will also appoint a clearing bank in Sydney, a top Australian official has said.
China keeps a tight grip on the value of its currency and limits capital flows into and out of the country on fears it could disrupt the economy.
However, authorities have made efforts to further liberalize the movements of its currency and create a more market-oriented exchange rate.