BEIJING, July 4 -- China's central bank announced on Friday that it has authorized the Bank of Communications, the nation's fifth largest lender, to be the clearing bank for renminbi (RMB) businesses in Seoul.

The announcement came after China and South Korea signed a deal Thursday to launch an RMB clearing service in the city and boost cooperation between their central banks.

The work will be undertaken by the bank's Seoul branch, according to a statement from the People's Bank of China, the central bank.

The yuan clearing business in Seoul will aid cross-border transactions among companies and financial institutions from China and South Korea through use of the Chinese currency RMB, or yuan. It will also facilitate bilateral trade and investment, the central bank said.

The move is considered another push for the use of RMB by banks and businesses in international transactions.

So far this year, China has reached agreements with Germany, Britain, France and Luxembourg to open local RMB trading hubs, as the Chinese currency has been increasingly used in global trade and investment.

Also on Thursday, China and South Korea agreed to establish a direct trading mechanism between the RMB and won, the South Korean currency, according to a joint statement signed by the two countries.