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Screenshot of a breaking news alert e-mail from Q2 2017
The People’s Bank of China (PBOC), China’s central bank announced today it 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 US Federal Reserve Board, according to a statement posted on the PBOC official website.
Last year the RMB was added to the IMF Special Drawing Rights (SDR) basket of currencies, a major win for the future prospects of the currency.
Senior Chinese and US officials endorsed a framework for facilitating RMB trading and clearing in the US for the first time during the eighth China-US Strategic and Economic Dialogue held back in June in Beijing.
The BOC New York branch is the largest Chinese funded finance institution in the United States.
China has recently boosted promotion of the 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 US dollars.
As noted above, 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. According to latest SWIFT reports the RMB was in fifth place among all currencies for use in international payments and Forex trading.