The Bank of England has entered into an agreement with the People’s Bank of China (PBoC) on renminbi (RMB) clearing and settlement arrangements in London.

The UK central bank and PBoC entered into a Memorandum of Understanding in order to allow the use of renminbi by banks and other firms in international transactions.

Through the MoU, the two parties will cooperate on relevant supervisory arrangement and share relevant information. The central bank said a clearing bank would be designated in London in due course.

Jon Cunliffe, deputy governor for financial stability at the Bank of England, stressed the important of London playing a role in internationalising the renminbi market and that the MoU represents “a key milestone on that journey."

"The move towards greater internationalisation of the RMB by the Chinese authorities is one of great importance that the Bank strongly supports. London is at the heart of the global financial system and is a major centre for RMB business.

“It is therefore entirely appropriate that London should play a role in the further internationalisation of the RMB through the opening of a RMB clearing bank in London.