China to Increase Using Yuan as Settlement Currency in Trades
China will widen the trial use of yuan to settle international trade to the entire country from 20 provinces, the People’s Bank of China said.
The central bank will also “actively respond” to foreign countries seeking to use the yuan as a reserve currency, and will help overseas companies raise yuan-denominated capital for investments outside China, according to today’s statement.
“Cross-market yuan-related business will develop further, as market demand rises,” the central bank said. Monetary authorities should be “orderly” in relaxing controls on cross- border capital trading and increase risk controls, it said.
China is promoting global use of the yuan after Premier Wen Jiabao said in March he is “worried” about holdings of dollar- denominated assets. Cross-border yuan trade settlement was 506.3 billion yuan ($77 billion) last year, the PBOC said today.
China approved 29.2 billion yuan of interbank bond market quotas for five foreign institutional investors as of December, the central bank said.
--William Bi. Editor: Joshua Fellman, Steven Fromm
To contact Bloomberg News staff for this story: William Bi in Beijing at +86-10-6649-7578 or wbi@bloomberg.net
To contact the editor responsible for this story: Joshua Fellman at jfellman@bloomberg.net
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