MOSCOW, September 29 (RIA Novosti) - The People's Bank of China (PBOC) has authorized direct trading between the yuan (RMB) and the euro in the interbank foreign exchange market on Monday, an official statement from the bank's website said.
"This is an important step in strengthening bilateral economic and trade connections between China and Eurozone member states," the PBOC statement said.
The agreement is the first step toward efforts promoting direct trading between the two currencies aimed at further internationalization of the Yuan.
"This will help lower currency conversion cost for economic entities, facilitate the use of RMB and Euro in bilateral trade and investment, promote the financial cooperation and enhance economic and financial ties between China and Eurozone member states," the people's Bank of China said.
The euro will be the sixth major currency to become directly exchangeable for the yuan after currencies from the United States, Australia, New Zealand, United Kingdom, and Japan.
According to a monetary policy report released by the PBOC in August, transactions exchanging the yuan for dollars totaled 12.2 trillion yuan in the first half of 2014, while trades for euros were worth 110.4 billion yuan and 251.7 billion yuan for yen.
The Society for Worldwide International Financial Telecommunications (SWIFT) found that RMB payments have nearly tripled in value worldwide over the past two years. Over one third of financial institutions around the world use RMB for payments to China and Hong Kong with Asia leading the way at some 40 percent. According to SWIFT's RMB tracker, the Chinese currency is currently the seventh-ranked global payments currency accounting for 1.64 percent of global payments.