China appoints Deutsche Bank as first European yuan clearing bank

The People's Bank of China (PBOC) has appointed Germany's Deutsche Bank as the first European clearing bank for the yuan, marking a significant step in the internationalization of China's currency. The announcement, made on Monday, allows Deutsche Bank to act as a "bridge" to Chinese markets and process yuan-denominated cross-border transactions for European financial institutions.

Deutsche Bank confirmed the decision, stating it will now offer direct, end-to-end processing, clearing, and settlement services for yuan transactions. This positions the German bank as a key connection between European and Asian financial markets. Alexander von zur Muehlen, CEO of Deutsche Bank for Asia-Pacific, Europe, the Middle East, Africa, and Germany, emphasized that the initiative will "strengthen the financial connection between China and Europe."

The bank highlighted its long-standing support for the yuan's internationalization, noting its early participation in CIPS, China's alternative to the SWIFT international payment system, since its launch in 2015. This move aligns with Beijing's objective to boost the yuan's global usage and diminish the world's dependence on the U.S. dollar. Currently, the dollar holds a 50.1% share of global payments, while the yuan accounts for only 3.1%, according to SWIFT data.

In late June, the PBOC announced measures to promote yuan internationalization, including allowing financial institutions to borrow yuan from the central bank using Chinese bonds as collateral. Additionally, the six major state-owned banks in China were authorized to conduct offshore yuan transactions directly from their headquarters, facilitating liquidity supply.

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will reinforce the financial connection between China and Europe.