RMB clearing bank launched in Pakistan to facilitate cross-border transactions with China

Pakistan's caretaker Minister for Finance, Revenue and Economic Affairs Shamshad Akhtar speaks during the opening ceremony of RMB clearing bank in Islamabad, Pakistan on Oct. 27, 2023. The Industrial and Commercial Bank of China (ICBC) in Pakistan has opened a renminbi (RMB) clearing bank, facilitating both Pakistani and Chinese businesses and financial institutions to settle cross-border transactions and meet the financing needs of the two countries. (Xinhua/Ahmad Kamal)

ISLAMABAD, Oct. 28 (Xinhua) -- The Industrial and Commercial Bank of China (ICBC) in Pakistan has opened a renminbi (RMB) clearing bank, facilitating both Pakistani and Chinese businesses and financial institutions to settle cross-border transactions and meet the financing needs of the two countries.

The grand opening ceremony, held in the Pakistani capital Islamabad on Friday, was attended by officials, experts and businessmen from Pakistan and China.

The Karachi branch of the ICBC was designated as the RMB clearing bank in Pakistan by the People's Bank of China, according to the ICBC.

Under this facility, the ICBC would offer the services of clearing and settlement of RMB transactions and facilitate in arranging RMB buying, selling, borrowing, or lending transactions for the participating banks in Pakistan.

Speaking on the occasion, Pakistan's caretaker Minister for Finance, Revenue and Economic Affairs Shamshad Akhtar said that the establishment of RMB clearing operations would connect Pakistani offshore and Chinese onshore RMB markets to facilitate the cross-border transactions in the fields of trade and investment.

Akhtar said that the services signify the further maturation of Pakistan's RMB clearing system, with China committing more resources to support the development of Pakistan's RMB system.

"The development of the RMB in Pakistan is not only meaningful for China but will also provide more business opportunities for Pakistan and deepen our commercial interactions with other countries in the system," she said.

The share of Chinese currency RMB or the yuan in the International Monetary Fund's (IMF) Special Drawing Rights basket has risen to over 12 percent, showing the growing importance of China in global trade, Governor of the State Bank of Pakistan, the South Asian country's central bank, Jameel Ahmad said.

The initiative of establishing a local RMB clearing system will yield long-term benefits to China-Pakistan relationship and Pakistan's economy and banking system, Ahmad said.

"The SBP remains committed to providing policy and regulatory support to strengthen further economic and financial ties with China for the mutual benefit of our consumers and businesses," he added.

Highlighting the China-Pakistan all-weather strategic cooperation, Chinese Ambassador to Pakistan Jiang Zaidong said that the opening of the RMB clearing bank in Pakistan will provide financial support for the two countries' cooperation on the joint building of the Belt and Road Initiative (BRI).

China is ready to work with Pakistan to implement the important consensus reached by the leaders of the two countries, build an upgraded version of the China-Pakistan Economic Corridor (CPEC), and make positive contributions to high-quality construction of the BRI, the ambassador said.

On the occasion, ICBC's Vice President Zhang Weiwu said the RMB clearing bank in Pakistan will further promote cooperation between the two countries in the financial field.

"The bank will promote the development of bilateral trade and support the construction of the CPEC to achieve mutual benefit and win-win cooperation of the two countries," he said.

Launched in 2013, the CPEC, a flagship project of the China-proposed BRI, is a corridor linking the Gwadar port in southwestern Pakistan with Kashgar in northwest China's Xinjiang Uygur Autonomous Region, which highlights energy, transport and industrial cooperation.

Chinese Ambassador to Pakistan Jiang Zaidong speaks during the opening ceremony of RMB clearing bank in Islamabad, Pakistan on Oct. 27, 2023. The Industrial and Commercial Bank of China (ICBC) in Pakistan has opened a renminbi (RMB) clearing bank, facilitating both Pakistani and Chinese businesses and financial institutions to settle cross-border transactions and meet the financing needs of the two countries. (Xinhua/Ahmad Kamal)