China Expands De-Dollarization to Europe, Allows Deutsche Bank To Clear Yuan Payments

For the first time, China has granted a European financial entity, Deutsche Bank, the authority to directly clear Chinese yuan settlements, in its latest de-dollarization push. This allows firms that pay in the Chinese yuan to settle payments in the same currency. Companies will have no requirements to convert currencies to the US dollar. Businesses can save millions in foreign exchange, and also help in strengthening the Chinese yuan. This gives the local currency a boost in the arm and an opportunity to perform well in the forex markets.

The People’s Bank of China (PBOC) designated Germany’s Deutsche Bank as the Chinese yuan clearing entity in Frankfurt. For the uninitiated, a clearing bank moderates the amount that banks swap during cross-border transactions and connects them when the actual fund settlement takes place. This is the first time that a European bank has agreed to clear Chinese yuan payments directly. China has stepped up de-dollarization and is aggressively pushing the agenda in every direction.

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