Shanghai vice-mayor Zhao Qizheng says he is optimistic some foreign banks will be able to do business in renminbi within a year.
'The final timetable would be announced by the People's Bank of China [PBOC], but I think this would happen soon,' he said.
'I do not mean in three, four or five years' time, but I am hopeful this could possibly happen within a year.' Shanghai, he said, had laid the groundwork for the event and banks would be chosen on the basis of their business performance and scale.
PBOC deputy governor Chen Yuan recently confirmed, without giving a timetable, that when the go-ahead was given, banks in Pudong in eastern Shanghai would be the first in the country to be given yuan licenses.
China wants to turn Pudong into a financial and business hub but few large banks and corporations are willing to relocate there because of poor infrastructure.
Shanghai is trying to lure more banks, however, by allowing them to set up sub-branches if they have operations in Pudong and to do yuan business later when approval is granted.
About 10 foreign banks have applied to set up sub-branches in Pudong, but foreign bankers reckon that no more than five would eventually be given yuan licences.