Monetary Takeover? Pakistan Allows Government And Private Bodies To Transact Using Chinese Yuan
Pakistan's central bank, State Bank of Pakistan (SBP) today (2 December) announced that both public and private sector enterprises of both countries could use the Chinese Yuan (CNY) for bilateral trade and investment.
Under existing foreign exchange regulations, the Yuan has approval for denominating foreign currency transactions in Pakistan. The SBP says that it has already put in place the required regulatory framework to facilitate the use of the Yuan in trade and investment transactions. The Yuan in Pakistan is considered to be at par with other international currencies such as the United States Dollar, the Euro and the Japanese Yen among others.
After signing a foreign currency swap Agreement (CSA) with its Chinese counterpart, the People’s Bank of China (PBC), the SBP took several measures to promote the use of the Yuan in Pakistan for trade and investment with China. In 2012, banks were allowed to accept deposits and give loans in the Yuan. In 2013, it had set up a system to enable banks to make use of the CSA so that banks could get Yuan from the SBP.
The Industrial and Commercial Bank of China's (ICBC) Pakistan branch has been permitted to establish a setup in Pakistan so that it can open Yuan accounts for locally-operated banks and to enable the settlement of Yuan-based transactions with China.