Frankfurt becomes Europe's first renminbi payment hub

FRANKFURT, March 28 Fri Mar 28, 2014 11:45am EDT

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FRANKFURT, March 28 (Reuters) - The central banks of Germany and China signed an agreement on Friday to facilitate transactions in the Chinese currency in Frankfurt, the Bundesbank said, making Germany's financial capital the first hub for such payments in Europe.

The Bundesbank and the People's Bank of China signed a memorandum of understanding during Chinese President Xi Jinping's state visit to Germany on Friday, ahead of a similar agreement between China and Britain expected on Monday.

"This will make it much easier for the German real economy to clear and settle payments denominated in renminbi, marking a major step forward in intensifying Germany's economic relations with China", Bundesbank board member Carl-Ludwig Thiele said.

The two central banks agreed to intensify their cooperation in clearing and settlement arrangements of renminbi payments and laid the groundwork for establishing a clearing bank.

Financial sources told Reuters on Thursday subsidiaries of Chinese banks such as the Bank of China would be considered for the clearing bank. (Reporting by Eva Taylor; Editing by Alison Williams)

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