ZURICH--The Swiss National Bank and the People's Bank of China have agreed to set up clearing arrangements for yuan trading in Switzerland, a move which will further boost trade and investment between the two countries.
The Swiss central bank said the deal represents further progress in deepening financial ties between Switzerland and China and will boost the cross-border use of the yuan, also known as renminbi, by companies and banks.
This comes after the central banks of the two countries established a currency swap line in July, allowing them to buy and sell their currencies up to a limit of 150 billion yuan, or 21 billion Swiss francs ($24.4 billion). Swap lines give banks in each country easier access to the underlying currencies when they need them.
The Swiss cabinet welcomed the agreement and said it will support efforts to establish its financial center as a hub for trading the Chinese currency.
Swiss Finance Minister Eveline Widmer-Schlumpf will hold talks with Chinese officials in Beijing next month aimed at increasing cooperation in the financial sector, the government said in a statement Thursday.
China is a key trade partner for the Alpine country, representing its biggest export market outside of Europe and North America. The two countries signed a free-trade agreement in 2013 giving them improved access to each other's markets.
Since 2009, as part of its effort to revamp the country's creaky financial system, the Chinese government has been pushing for a greater role for the yuan on the world stage, and the central bank has signed currency-swap agreements with more than 20 central banks, including the European Central Bank and those in the U.K. and Australia. The swap deals are designed primarily to allow central banks to ease liquidity squeezes during periods of financial-market tension but also will boost two-way investment.
Write to Neil MacLucas neil.maclucas@wsj.com
(END) Dow Jones Newswires
January 22, 2015 03:10 ET (08:10 GMT)
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