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China, Britain set up currency swap line

Press Trust of India  |  Beijing 

China has expanded its currency convertibility to Britain as the central banks of the two countries signed a three-year sterling-yuan currency swap line to boost bilateral trade and financial stability.

China's first such agreement with a G7 country was signed between Bank of England (BoE) governor Mervyn King, who steps down at the end of the month, and his counterpart Zhou Xiaochuan of the People's Bank of China.

The maximum value of the reciprocal 3-year yuan/sterling currency swap will be 200 billion yuan (USD 32.6 billion or 20 billion pounds), according to China's central bank.

The currency swap line will facilitate yuan liquidity in London and overseas markets, as well as benefit bilateral trade and investment, the central bank said, state-run Xinhua agency reported.

China's cabinet pledged in May to steadily introduce market-oriented interest rate and exchange rate system reforms, permitting individual investors to buy foreign equities and mapping out operational plans to make the yuan convertible under the capital account.

China has signed currency swap agreements with more than 20 countries and region to promote use of the yuan in trade and investment.

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First Published: Sun, June 23 2013. 16:25 IST