The building of the People's Bank of China in Beijing Photo: VCG

The central banks of China and Pakistan recently signed a memorandum of cooperation (MOC) on establishing yuan clearing arrangements in Pakistan, China's central bank announced on Wednesday.

The establishment of a clearing arrangement for the Chinese currency in Pakistan will help enterprises and financial institutions from the two countries conduct cross-border transactions in yuan and further facilitate bilateral trade and investment, read an announcement from the People's Bank of China (PBC).

The news was released when Pakistani Prime Minister Muhammad Shehbaz Sharif was paying a visit to China. A joint statement was issued on Tuesday, stating that the two sides signed and concluded a number of agreements covering bilateral cooperation in areas such as e-commerce, digital economy, exports of agricultural products, financial cooperation, protection of cultural property, and infrastructure.

Sharif reaffirmed Pakistan's commitment to further strengthen and deepen the China-Pakistan All-weather Strategic Cooperative Partnership and enhance practical cooperation in all areas, according to the statement.

Prior to the yuan clearing arrangement, the PBC inked a 10-billion-yuan ($1.58 billion) currency swap deal with the State Bank of Pakistan, the Pakistani central bank, in December 2011, which was also aimed at promoting bilateral financial cooperation and boosting trade and investment.

The latest announcement about the yuan clearing arrangement came just 10 days after the PBC said that it had signed an MOC with the central banks of Laos and Kazakhstan to establish yuan clearing arrangements.

In recent years, China's central bank has continuously strengthened cooperation with central banks of other countries and regions, and actively promoted cooperation in overseas yuan business, such as currency swaps, overseas settlement and cross-border payment in digital currencies.

China's central bank had authorized 27 overseas yuan clearing banks in 25 countries and regions by the end of 2021.

The PBC also signed bilateral currency swap agreements with central banks or monetary authorities of 40 countries and regions worth a total of more than 4.02 trillion yuan by 2021.

Global Times