The People’s Bank of China, the central bank, plans to accelerate the launch of itsinternational 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 Shiyusaid 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 morediverse group of clearing banks, making the yuan clearing process cheaper, which is veryimportant, said experts.
The central bank will encourage government departments to use the yuan as the maincurrency 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 theInternational Monetary Fund’s Special Drawing Rights basket, and encourage foreign centralbanks to include yuan assets in their forex reserves.
“We are considering removing the quotas for foreign institutional investors in the interbankbond market,” it said.
The central bank also wants foreign institutions to issue yuan-denominated bonds in theonshore market, and expand yuan lending in offshore market.
A research note from Standard Chartered Plc said that the yuan is likely to be “more freelyused” by 2018.
“A 60 percent probability of success will be there for the yuan to join the SDR basket as aninternational foreign reserve,” said the Standard Chartered note.