Bank of China approved for yuan clearing in Frankfurt

Beijing (AFP) - China's central bank has approved Bank of China, one of the country's major financial institutions, as the clearing bank for yuan transactions in Germany's financial centre Frankfurt, it said Thursday.

The People's Bank of China (PBoC), the central bank, made the announcement in a one sentence statement on its website.

The designation was based on a memorandum of understanding with the Deutsche Bundesbank, Germany's central bank.

State-owned Bank of China is one of China's so-called "big four" banks.

The announcement came a day after the PBoC announced that a subsidiary of China Construction Bank, the country's second-largest lender, had been chosen to undertake yuan clearing business in London.

China on Thursday also started direct trade between the yuan, also known as the renminbi, and Britain's pound, without using the US dollar as an intermediary.

Moves to internationalise the yuan have picked up pace in line with growth in China's economy, with direct trading moving to more currencies.

But while China has been actively pushing the yuan's greater use internationally and taken steps towards interest rate liberalisation, full convertibility is seen as being far away.