China has appointed Germany’s Deutsche Bank as a renminbi clearing bank for Europe, making it the first non-Chinese financial institution on the continent to receive the designation.
The People’s Bank of China announced the development on Monday, following a memorandum of understanding signed with Deutsche Bank.
The appointment will enable the Frankfurt-based bank to process yuan transactions directly between Europe and China. Deutsche Bank said it would provide clearing and settlement services for cross-border renminbi transactions involving European financial institutions and businesses.
The bank described its new role as a bridge between European businesses and China’s payment infrastructure, allowing clients to conduct cross-border trade and investment with greater flexibility.
Before the appointment, Chinese banks including Bank of China, Industrial and Commercial Bank of China, and China Construction Bank handled renminbi-related cross-border transactions through their branches in cities such as London, Frankfurt, Paris, Budapest and Luxembourg.
Alexander von zur Muehlen, Deutsche Bank’s Chief Executive Officer for Asia Pacific, Europe, the Middle East and Africa and Germany, said the appointment would deepen financial ties between China and Europe.
He said the move would strengthen China-Europe financial connectivity and improve the bank’s ability to support clients involved in international trade and investment.
China’s decision comes as Beijing intensifies efforts to increase the international use of the renminbi and reduce reliance on the US dollar for global trade and financial transactions.
In June, China announced plans to expand the global use of its currency. It subsequently designated Standard Bank and Industrial and Commercial Bank of China as renminbi clearing banks for Africa, covering transactions across 19 countries.
The People’s Bank of China also announced on Monday a five-year strategy aimed at further expanding the use of the renminbi in international markets.