Yuan settlement trial to be extended
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China will expand the yuan cross-border settlement to further facilitate trading and increase the currency's influence globally.
The areas where the settlement trial is being conducted will be extended and the number of companies allowed to settle cross-border trade in yuan will also be increased, said a statement, which was jointly issued by the People's Bank of China, China Banking Regulatory Commission, China Insurance Regulatory Commission and China Securities Regulatory Commission, posted on the central bank's Website.
The aim of the yuan settlement scheme is to stabilize trade, trim exporters' currency exposure and build up the yuan's position in the international monetary system, which now centers on the United States dollar.
Previously, companies on the Chinese mainland had to convert yuan into US dollars or other currencies to settle international trade.
By settling cross-border trade in yuan, mainland exporters can avoid foreign currency exposure, which will help them in financial planning.
The trial so far has involved about 400 companies since the first yuan-backed transaction was made in Shanghai in July.
Transactions using the Chinese currency exceeded 100 million yuan (US$14.6 million) by the end of September.
In April, the mainland allowed Shanghai and four cities in Guangdong Province to start the trial of settling trade in yuan with businesses in Hong Kong, Macau and the 10-member Association of Southeast Asian Nations.
Richard Yorke, HSBC China president and chief executive officer, said earlier that the bank hopes to see the program made widely available to all enterprises.
"The benefits of settling transactions in the currency are obvious both in terms of costs and sales proceeds," he said.
Xia Bin, head of the financial research institute of the Development Research Center of the State Council, also urged in November in Shanghai that the yuan trial should be expanded nationwide.
The central bank also reaffirmed at a meeting that it would maintain the relatively loose monetary policy next year.
