Karachi: The Bank of China has been allowed by the State Bank of Pakistan (SBP) to establish a Chinese yuan settlement system and clearing setup in Pakistan, according to a news report. The SBP has emphasised that this is a policy tool for ensuring that import and export transactions are denominated in yuan.
The SBP has already signed a currency swap agreement with the People’s Bank of China in a bid to promote bilateral trade and to increase foreign direct investment between the two countries. Under these new provisions, the Bank of China can open yuan accounts in Pakistan’s banks to facilitate yuan-based transactions. According to the SBP’s official statement, this new mechanism is expected to reduce costs and increase efficiency in the local banking system.
The SBP expects this initiative to yield long-term benefits in strengthening the relationship of the two countries, Pakistan’s banking sector, and the country’s overall economy.
