(Aug 12): China has authorised Deutsche Bank AG as the first non-Chinese lender that can settle yuan transactions in Europe, expanding its clearing network to promote the currency overseas.

The German bank will handle yuan clearing in the region from Frankfurt, where it’s headquartered, according to a statement from the People’s Bank of China. Previously, such processing in Europe was handled by units of Bank of China, Industrial & Commercial Bank of China and China Construction Bank from cities including Frankfurt, London, Paris and Budapest, as well as Luxembourg.

The move underscores China’s push to internationalise its currency and lessen reliance on the dollar. In Europe, yuan usage is supported by China’s deep economic ties, reflected in record trade surpluses with the bloc and Germany, even amid EU concerns over imbalances.

Client inquiries and yuan‑settlement volumes have risen in recent years, while global firms increasingly invoice directly in yuan to cut costs and improve pricing transparency with Chinese suppliers, Leo Yin, president of Deutsche Bank China said. Greater interest in yuan-denominated assets will also further boost demand for the yuan, he added.

“European multi-nationals with significant commercial activity in China, particularly in manufacturing, automotive and green technology, are likely to be key drivers,” Yin said.

Since last year, China has been authorising more foreign lenders to clear yuan settlements, including First Abu Dhabi Bank in the United Arab Emirates, DBS Group in Singapore, and Standard Bank in Africa.

In another sign of rising global demand for the yuan, China’s own yuan payment network, Cross-Border Interbank Payment System, or CIPS, has absorbed more foreign banks as direct participants, with more looking to join.

Foreign banks could offer distinct advantages through their own networks, while China is also eager to expand its overseas clearing infrastructure, said Guan Tao, global chief economist of Bank of China International.

Uploaded by Magessan Varatharaja