* PBOC and BOC's Taipei branch sign clearing agreement
* Taiwanese banks to start yuan business in Feb (Adds PBOC's statement, other details)
TAIPEI Jan 25 China's central bank and Bank of China's Taipei branch signed a clearing settlement agreement on Friday, completing the last step to prepare for yuan transactions in Taiwan to start next month.
The move comes after China and Taiwan signed an agreement in September to set up a clearing system for yuan transactions in the self-ruled island. That is raising hopes that Taiwan will play a key role in the internationalisation 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 before the Lunar New Year, which falls in February.
"Financial institutions on both sides of the strait will be able to conduct cross-border RMB business for their clients, and in addition, they will be able to conduct RMB settlement business for clients through the clearing bank channels," the People's Bank of China (PBOC) said in a separate statement.
Individuals who sell or buy yuan in a day will be limited at 20,000 yuan ($3,200), similar to other offshore markets, while transfers of money to China will be capped at 80,000 yuan.
Bank of China's Taipei branch had earlier been appointed as the clearing bank in Taiwan. ($1 = 6.2181 Chinese yuan) (Reporting by Lin Miao-jung, Faith Hung and Clare Jim; Editing by Jacqueline Wong)