The People’s Bank of China, the central bank, plans to accelerate the launch of its international payment system, with the first phase of the rollout by the end of this year, according to a report on its website.
This system will be located in Shanghai, the central bank’s former deputy governor Liu Shiyu said earlier, and will enable foreign banks to be part of the yuan clearing business.
The steps will also accelerate yuan’s internationalization by creating a bigger and more diverse group of clearing banks, making the yuan clearing process cheaper, which is very important, said experts.
The central bank will encourage government departments to use the yuan as the main currency in statistics, settlements and in the management of foreign-related economic work.
In the report, the PBOC said China will continue to push for the yuan’s inclusion in the International Monetary Fund’s Special Drawing Rights basket, and encourage foreign central banks to include yuan assets in their forex reserves.
“We are considering removing the quotas for foreign institutional investors in the interbank bond market,” it said.
The central bank also wants foreign institutions to issue yuan-denominated bonds in the onshore market, and expand yuan lending in offshore market.
A research note from Standard Chartered Plc said that the yuan is likely to be “more freely used” by 2018.
“A 60 percent probability of success will be there for the yuan to join the SDR basket as an international foreign reserve,” said the Standard Chartered note.