Bank of China to Clear Yuan Transactions in Paris

China's central bank said Monday it had approved state-owned Bank of China, one of the nation's four biggest lenders, to be its designated yuan currency clearing house in Paris.

In June, China and France signed an agreement for yuan clearing arrangements, one of a number of such accords Beijing has sought with foreign countries to help boost use of its currency overseas.

Yuan clearing allows companies and financial institutions to use the currency for cross-border transactions, and promotes liberalization of trade and investment.

The People's Bank of China, the central bank, said in a brief statement posted on its website that the Paris branch of the Bank of China would take up the clearing role following agreement with France's central bank.

Transactions organisation SWIFT said last month that Europe represents 10 percent by value of global payments in China's currency. Over the past year, France's yuan payments have jumped almost 44 percent, it said.

China's special administrative region of Hong Kong is the dominant center for offshore yuan trading.

In July, China designated the Bank of Communications as the clearing bank in Seoul for yuan transactions in South Korea.

Before that, it named the Bank of China as the clearing bank for yuan dealings in Frankfurt, Germany, and the state-owned China Construction Bank in London.

European countries are competing to become the dominant hub for yuan business in the continent.

China keeps a tight grip on the value of its currency and limits capital flows into and out of the country due to fears they could disrupt the economy.

But authorities have moved gradually to liberalize the yuan's movements and allow a more market-oriented exchange rate.