China Expands Yuan Clearing to Boost Global Currency Use
China has taken another step in its efforts to promote global use of the yuan by expanding its central clearing system. The Shanghai Clearing House began offering central counterparty clearing services for spot transactions involving the Singapore dollar, New Zealand dollar, and Thai baht on September 14.
The expansion aims to support the development of Belt and Road currencies in China's interbank foreign exchange market and broaden the reach of its foreign-exchange clearing services. Central counterparty clearing reduces counterparty risk and streamlines settlement by placing a clearing house between buyers and sellers.
On the first day, trading in the three newly added currencies totaled about 996 million yuan ($148.49 million), with twelve banks participating in the initial session. This marks another layer in China's broader push to strengthen the yuan's use in cross-border transactions and build greater liquidity in yuan-linked foreign exchange markets.