South Korea to get clearing system for China's yuan

yuan notes
Image caption Memorandums have already been signed with several European countries

South Korea will get a yuan clearing system in the capital Seoul, expanding the list of states with direct access to trade in the Chinese currency.

China's central bank has signed a memorandum of understanding (MOU) with the Bank of Korea.

The signing took place during Chinese President Xi Jinping's visit to South Korea.

The timescale for the establishment of the clearing system has not been disclosed.

A clearing system, also known as a clearing house, essentially acts as the middleman between two different parties, and is also the agent through which financial instruments such as shares, bonds and currencies are often traded.

The move comes days after the French central bank also signed an MOU with its Chinese counterpart to set up a renminbi payment system in Paris.

Banque de France said in a statement: "This MoU is the first step towards the creation of a renminbi clearing and settlement infrastructure in Paris."

Earlier this year, China's central bank signed similar MOUs with its counterparts in Germany and the United Kingdom.

Last month, the British pound became the fifth major currency to be exchangeable directly for yuan in Shanghai, joining the Australian and New Zealand dollars, as well as the Japanese yen and the US dollar.

The Chinese currency ranks as the seventh most used payment currency globally.

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