Pakistan allows Bank of China to establish yuan settlement system
In a statement, the SBP emphasised that it had continuously been taking policy measures to ensure imports, exports and transaction financing with China were denominated in the Chinese currency.
The SBP has also inked a Currency Swap Agreement (CSA) with People’s Bank of China (BOC) to promote bilateral trade and financing direct investment between the two Asian neighbours in their respective local currencies.
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The Bank of China can also provide yuan liquidity to the interbank ket for the settlement of transactions.
“These steps are part of the efforts by SBP to encourage trade with China in Yuan and eventually in the respective local currencies. This settlement and clearing mechanism is expected to reduce costs and increase efficiency for the local banking system in transacting in Yuans,” an SBP spokesperson said.
This is SBP’s second agreement with a Chinese bank to facilitate local currency cross-border trade.
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