The State Bank of Pakistan allowed the Bank of China to set up compensation and compensation arrangements for the Chinese yuan in Pakistan for payments in Chinese currency and strengthen trade relations between the two countries.
The SBP underlined in a statement that policy measures have been taken continuously to ensure that imports, exports and financing of transactions with China are denominated in yuan.
Previously, the SBP had signed an agreement on currency exchange with the People’s Bank of China.
The main objective of signing this agreement was to promote bilateral trade and finance direct investment between the two countries in their respective national currency.
Now, the statement said, the Bank of China may open yuan accounts of banks operating in Pakistan to facilitate the settlement of yuan-based transactions, such as transfers to / from China.
The Bank of China can also provide the interbank bank with liquidity in yuan to settle transactions.
Previously, in 2015, the SBP has already allowed the China Trade and Industry Bank (ICBC) to offer the same services in Pakistan.
“These steps are part of efforts to promote trade with China in yuan and eventually in local currencies, and this compensation and compensation mechanism is expected to cut costs and increase the efficiency of the local banking system in China transactions , improve market liquidity and facilitate the settlement of increasing trade and investment transactions between China and Pakistan in yuan, “said the State Bank of Pakistan.