Details of a mechanism that allows settlement of cross-border trade with Hong Kong in yuan would soon be finalised, the mainland's central banker said at the National People's Congress yesterday. Zhou Xiaochuan, governor of the People's Bank of China, also said the 200 billion yuan (HK$227 billion) currency-swap agreement reached last month was ready. It is expected to play a key role in the proposed yuan clearing system. Chief Executive Donald Tsang Yam-kuen hinted on Tuesday that the arrangements could be introduced as early as this month. Guangdong governor Huang Huahua confirmed his administration had designated four cities for yuan-denominated trade clearing on a trial basis. At present, trade between Hong Kong and mainland companies is cleared in Hong Kong and US dollars. But it remains unclear whether the yuan clearing system would apply to all kinds of bilateral trade. 'Since Hong Kong introduced a yuan-denominated settlement programme for individual businesses in late 2003, mainly in retail businesses catering to mainland tourists, I don't think there's a lot standing in our way [to extend into trade],' Mr Huang said. 'The new clearing system will soon be unveiled, smoothly.' Bilateral trade between Hong Kong and the mainland totalled US$203 billion last year. One prerequisite for a successful introduction of the yuan-settlement scheme is sufficient yuan savings in the vaults of local lenders, which are apparently running short because of restrictions on yuan conversion by bank clients. That is where the currency-swap scheme, designated to run for three years, comes in. 'The currency-swap has boosted confidence in these adverse macroeconomic circumstances and we can summon it into operation whenever we are in need,' Mr Zhou said. The scheme would also help ease possible short-term liquidity crunches on both sides of the border, he said. Mr Huang said he hoped the cross-border collaboration in finance would extend beyond the trade settlement area. 'We are looking forward to more Hong Kong banks setting up outlets and logistics centres in Guangdong,' he said.