KARACHI: State Bank of Pakistan (SBP) Governor Jameel Ahmad said on Friday using the renminbi (RMB) for settling cross-border trade and investment transactions with China can further strengthen the long-lasting economic and financial ties.

Addressing a ceremony on promoting the use of RMB in cross-border settlement organised by ICBC Bank Ltd, Mr Ahmad said the SBP has put in place the required regulatory framework that facilitates the use of the RMB in trade and investment transactions, such as the opening of letters of credit and availing financing facilities in the Chinese currency.

The event was held to mark ICBC Bank’s designation as the RMB clearing agent in Pakistan by the People’s Bank of China (PBoC). The SBP governor said the RMB is on a par with other international currencies, such as the dollar, euro and yen in terms of regulations in Pakistan. Both public- and private-sector enterprises are free to choose the RMB for bilateral trade and investment activities, he added.

As a result of the central bank’s efforts to promote the use of the RMB in trade with China, RMB-denominated imports of Pakistan from China increased from two per cent in 2017-18 to 18pc in 2021-22. Mr Ahmad also discussed the benefits of a local RMB clearing system and denominating trade in the RMB, including a fast turnaround time and reduced cost for the local banking system, easy access to the RMB settlement for the local banking system, improved and more competitive pricing of bilateral trade transactions, and the opening up of new markets for Pakistani businesses.

Published in Dawn, October 28th, 2023