Yuan begins direct trading against sterling
Move comes as Bank of China becomes first lender to clear Chinese currency in euro zone
Yuan internationalisation took key steps forward yesterday as direct trading of the currency against the pound began and the People's Bank of China announced the first yuan clearing bank in the euro zone.
The moves mark major developments, giving the yuan a presence in the world's biggest foreign exchange market and laying the groundwork for allowing it to trade directly against the world's second most actively traded currency - the euro.
The pound is the fifth major currency to trade directly against the yuan, joining the Australian and New Zealand dollars, the Japanese yen and the US dollar, and the move to direct trading beats plans by Singapore and South Korea.
Direct trading means the fixing of the exchange rate will be computed without involving a cross rate with the US dollar, as currently happens.
The selection of Bank of China's Frankfurt branch as the first bank in the euro zone able to clear payments in the Chinese currency will help Germany's financial capital become a hub for yuan trading as China promotes greater use of the currency in global trade and finance.
The move comes after China Construction Bank was named as the yuan clearing bank for London.