Cross-border yuan settlement

The first cross-border yuan trade settlement was announced by the Bank of China (BOC), China’s largest foreign exchange bank, to have been completed on Monday, July 6.

The payee was Shanghai Electric International Economic and Trading Co. Ltd., a subsidiary company of Shanghai Electric Group Co. Ltd., and the remitter was the company’s business partner in Hong Kong, said the Beijing-based BOC in a statement on its Web site Monday.

However, there was no indication of the amount involved in the settlement.

Li Lihui, president of the BOC, said at the ceremony of the first cross-border yuan trade settlement held in Shanghai that the deal could facilitate trade between China and neighboring countries and regions and help enterprises avoid exchange rate risks.

“Cross-border yuan trade settlement could help firms simplify trading procedures and reduce operation costs. It could also help banks to expand business scope, improve service, and forge stronger ties with enterprises,” Li added.

Under the supplementary memorandum of cooperation signed by the Monetary Authority and the People’s Bank of China, Hong Kong businesses can settle trade transactions in yuan with selected businesses in Shanghai, Guangdong, Zhuhai, Shenzhen and Dongguan.

“Using yuan to settle trade transactions can help expand yuan business locally, facilitate the yuan’s liquidity and create the right condition for Hong Kong to develop into a yuan-clearing center,” Chief Executive Donald Tsang said.

A memorandum of understanding on expanding the yuan business in Hong Kong was signed in 2003.

Source : Konaxis

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