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China and Canada us expand use of Chinese currency

Staff writer |
China and Canada agreed to expand the use of the Chinese currency in trade and investment, with their central banks setting up a swap line worth the equivalent of $32 billion.

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Under the agreement, reached during a visit to Beijing by Canadian Prime Minister Stephen Harper and announced by both sides on Saturday, the People’s Bank of China will designate a clearing bank in Canada for transactions in the yuan—the first in North America and a key step in boosting the use of China’s currency.

China also granted Canadian financial institutions a 50 billion yuan quota to invest in Chinese capital markets, according to statements from the Canadian government and the PBOC.

The swap accord would allow the two central banks to lend each other up to 200 billion yuan and 30 billion Canadian dollars, the PBOC said. It said the agreement would be in effect for three years.

China is promoting greater use of the still-tightly managed yuan in the world economy, aiming—Chinese economists say—to eventually to make it a main reserve currency alongside the U.S. dollar and the euro.

The PBOC has signed swap agreements with a number of countries, including one earlier this week with Qatar worth 35 billion yuan in a swap line to boost financial dealings with the gas-rich Gulf state.

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