The People's Bank of China (PBOC), the central bank, announced on Wednesday it has authorized Bank of China's (BOC's) New York branch to provide Renminbi (RMB) clearing services in the United States.
It is the first time for China to set up an RMB clearing bank in the United States.
The decision was made according to a PBOC memorandum of cooperation signed with the U.S. Federal Reserve Board, according to a statement posted on the PBOC official website.
An employee at a bank counter in Nantong, Jiangsu province, counts renminbi and dollars. [Photo/China Daily]
As the world's largest economy, the United States is a key destination for the RMB in its internationalization process.
Senior Chinese and U.S. officials endorsed a framework for facilitating RMB trading and clearing in the U.S. for the first time during the eighth China-U.S. Strategic and Economic Dialogue concluded in June in Beijing.
The BOC New York branch is the largest China-funded finance institution in the United States.
China has vigorously promoted global use of the RMB as the world's largest trading nation looks to lower transaction costs in international trade, which is primarily settled in U.S. dollars.
The 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.
The PBOC's latest report showed that by the end of 2015, the RMB had become the third most-used currency in cross-border trade and financing. It was in fifth place among all currencies for use in international payments and foreign exchange trading.