June 29, 2014 / 10:01 AM / in 4 years

French, Chinese central banks agree on renminbi payment system

PARIS, June 29 (Reuters) - The French central bank on Sunday said it had signed a memorandum of understanding (MoU) with its Chinese counterpart to set up a renminbi payment system in Paris.

“This MoU is the first step towards the creation of a renminbi clearing and settlement infrastructure in Paris,” the French central bank said in a statement.

Competition is fierce among Europe’s major financial centres to trade in China’s currency. Frankfurt and Luxembourg are vying with London, the favourite of many analysts, and Switzerland is trying to muscle its way into the competition.

The payment system agreed between France and China will function on the basis of a clearing bank that will be designated by the People’s Bank of China (PBOC), the French central bank said.

China stepped up plans to increase the international use of its currency last October with an agreement between the European Central Bank and the PBOC to swap euros and yuan.

That deal followed a string of currency swaps China set up with other nations to promote the use of yuan for commercial and financial transactions. (Reporting by Sybille de La Hamaide; editing by Keiron Henderson)

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