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Recently, Industrial and Commercial Bank of China (Brazil) Co., Ltd. has successfully handled the first cross-border RMB settlement business. The two sides of the trade no longer use the US dollar as the intermediate currency, showing significant advantages in terms of liquidation efficiency and exchange costs.

In February of this year, the People’s Bank of China announced the signing of a memorandum of cooperation with the Central Bank of Brazil to establish a RMB clearing arrangement in Brazil. Enterprises and financial institutions of the two countries can use RMB for direct settlement.

The successful implementation of the cross-border RMB settlement business this time means that enterprises of the two countries have more currency choices in trade exchanges, which will help increase the proportion of RMB in the trade and investment between the two countries.

It is understood that China is Brazil’s largest trading partner. In recent years, bilateral economic and trade exchanges have become increasingly close, and the amount of cooperation has continued to increase.
The Central Bank of Brazil announced on March 31 that the renminbi has surpassed the euro to become the country’s second largest international reserve currency.

The renminbi is the fifth most active currency in international payments and the fifth largest international reserve currency; it ranks third in weight in the International Monetary Fund’s Special Drawing Rights basket of currencies. Up until now, the People’s Bank of China has authorised 31 RMB clearing banks in 29 countries and regions.

The RMB clearing banks have played an active role in improving the efficiency of RMB cross-border clearing and facilitating the use of cross-border RMB, providing market entities with a more diversified currency selection.

In addition, China has signed bilateral currency swap agreements with the central banks or monetary authorities of 40 countries and regions, with a total agreement of more than 4 trillion yuan.

The bilateral local currency cooperation agreement is an agreement signed by the central banks of the two countries that aims to promote the direct use of local currency settlement in bilateral cross-border trade and investment between the two countries, deepen financial cooperation between the two countries, and improve the level of trade and investment facilitation.

In 2022, China’s cross-border RMB settlement scale will exceed 42 trillion yuan, an increase of more than three times compared to 2017.

By Admin