China’s central monetary authority – the People’s Bank of China (PBOC), has informed later on Wednesday that it authorized Bank of China’s (BOC’s) branch in New York branch to provide Renminbi (RMB) clearing services in the United States. This is for the first time when China authorized any bank to do RMB clearing services in the North American country.
As the official statement of PBOC informed on the website, the decision was made according to a PBOC memorandum of cooperation signed with the US Federal Reserve Board, which has the authority to approve such business. This BOC New York branch is the largest Chinese funded finance institution in the United States.
All this comes after the Chinese currency – renminbi – was added to the IMF Special Drawing Rights (SDR) basket of currencies during the previous year, what is a crucial step forward for China’s currency. IMF has decided to add the RMB to its Special Drawing Rights (SDR) currency basket, making it one of the five reserve currencies fully endorsed by the 188-member organization.
Framework for facilitating RMB trading and clearing in the US was firstly introduced by official from both countries for the first time during the eighth China-US Strategic and Economic Dialogue, which was held in Beijing in June.
China is now taking advantage of this change and promoting the use of its currency in global trade, while many nations are trying to reduce transaction costs, primarily settled in US dollars.
The latest report of PBOC showed that by the end of the previous year, the RMB had become the third most-used currency in cross-border trade and financing. According to recent SWIFT reports the RMB was in fifth place among all currencies for use in international payments and Forex trading.
For any questions or recommendations, feel free to write us on hello@goforex.eu
