Taiwan and China select clearing banks

Taiwan and China have taken the next decisive step towards minimizing the influence of the US dollar over their trade transactions.

The central banks of Taiwan and China have appointed the banks that are to serve as clearing banks for Taiwan dollar and renminbi transactions. The Bank of Taiwan, the central bank, has picked its Shanghai branch as the clearing bank for Taiwan dollar transactions in China.

Bank of China, one of the Big Four state-owned banks, is expected to be chosen by China's central bank, the People's Bank of China, to be the yuan clearing bank in Taiwan.

China and Taiwan signed an agreement on a clearing system for each other's currency earlier this month. Under the landmark agreement, there will no longer be a need to convert each other's currency into US dollars first in trade transactions. Taiwan's banks will also be allowed to offer loans in renminbi to entities outside Taiwan.