BOC authorized as RMB clearing bank in Frankfurt

China's central bank announced on Thursday that it had authorized the Bank of China (BOC) as clearing bank for RMB business in Frankfurt.

The work will be undertaken by the BOC Frankfurt Branch, said the People's Bank of China (PBOC) website.

The PBOC made the decision in accordance with a memorandum of understanding signed with the Deutsche Bundesbank on March 28 to help turn the city into an offshore RMB center.

"The appointment of BOC as the RMB clearing bank in Frankfurt is welcome news. This move will increase confidence in the use of RMB for trade. It will also enable a more efficient transfer of funds within the European time zone," said Evan Goldstein, Deutsche Bank Global Head of Renminbi Services.

The Frankfurt authorization came one day after Chinese authorities designated China Construction Bank (CCB) to be the RMB clearing bank in London.

HSBC and Deutsche Bank announced that they have been made market makers in direct RMB to sterling trading.

"Helping build offshore pools of liquidity in the RMB has been a focus for us in markets around the world. London has the potential to give a dramatic boost to global adoption of the RMB by the investment community, which we see as the key next stage in the currency's development," said Beng-Hong Lee, Deutsche Bank Head of Markets, China, which signed an MOU with CCB.