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People's Daily Online>>China Business

System to promote yuan use globally

By  Wang XiaoTian in Beijing, Diao Ying in London and Oswald Chen  (China Daily)

08:17, April 12, 2012

New trading platform expected to enhance cross-border settlements

A system to settle cross-border yuan payments and boost the convertibility of the currency will be set up, central bank officials said on Wednesday.

The move will promote the international use of the yuan, analysts said.

The China International Payment System will be established in one or two years. It will make yuan clearance safer and more efficient for cross-border trade and investment settled in the currency, said Li Bo, head of the central bank's second monetary policy department, at a news briefing in Beijing.

The system will help gradually make the currency convertible and will facilitate wider use of the yuan in cross-border settlements, Li said.

Currently cross-border yuan clearance is conducted through the Hong Kong and Macao branches of Bank of China, or agency banks of overseas participants.

While demand for cross-border renminbi settlement is increasing, transaction costs in the current payment system are higher than those conducted in other major currencies, such as the US dollar, analysts said.

"The new system will link domestic and overseas participants directly, and support different languages including Chinese and English. What's more, the working hours will be extended to 17 or 18 from the current eight to nine hours to cover yuan settlement demand from different time zones," said Li Yue, director of the payment and settlement department at the People's Bank of China.

"The rising international use of the renminbi is one of the most exciting developments in global trade and finance," said Stuart Fraser, chairman of the policy and resources committee at the City of London corporation.

"Any measures which can help facilitate cross-border transactions and increase efficiency and security are a very welcome development," Fraser said.

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