Taiwan says to allow banks to conduct yuan business

TAIPEI Fri Jan 25, 2013 2:17am EST

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TAIPEI Jan 25 (Reuters) - China's central bank and Bank of China's Taipei branch have signed a clearing settlement agreement, Taiwan's central bank said on Friday, completing the last step to prepare for yuan transactions in Taiwan.

The move comes after China and Taiwan signed an agreement in September on establishment of a clearing system for yuan transactions in the self-ruled island. That is raising hopes that Taiwan will play a key role in the internationalization of the yuan.

Taiwan's central bank said in a statement that it will allow local banks to conduct yuan business in Taiwan as soon as the Chinese New Year, which falls in February.

Bank of China's Taipei branch had earlier been appointed as the clearing bank in Taiwan.

(Reporting by Lin Miao-jung and Faith Hung; Editing by Richard Borsuk)