Bank of China Ltd's Tokyo branch launched its renminbi clearing business on Wednesday in Tokyo, bringing the global financial center a step closer to become an offshore RMB trading hub.
"The establishment of the RMB clearing mechanism in Japan will provide new impetus for Tokyo to consolidate its position as an international financial center," said Chen Siqing, chairman of Bank of China, at the launch ceremony held at the Hotel New Otani Tokyo.
"It will also help Chinese and Japanese companies and financial institutions to use the RMB for cross-border transactions and facilitate trade and investment between the two countries," Chen added.
Data from the Japanese Ministry of Finance showed that China is Japan's largest trading partner, the second-largest foreign investment destination and the largest source of overseas tourists, with bilateral trade surpassing $317.5 billion in 2018.
Meanwhile, the People's Bank of China, China's central bank, said that around 8 percent of the bilateral goods trade was settled in RMB in 2017 and China's crossborder RMB payment with Japan was over 450 billion yuan ($67.3 billion) in 2017.
Cheng Yonghua, Chinese ambassador to Japan, said the establishment of an RMB clearing bank in Tokyo will encourage the use of local currency in trade settlements and investment between China and Japan, which can "reduce exchange costs for companies, effectively avoiding rate risks and playing a positive role in developing the economy of the two countries and the Asia-Pacific region".
"I think that with the continuous advancement of China's financial reform and the improvement of China's level of opening-up, financial cooperation between China and Japan will have a promising future," Cheng added.
Yasuo Fukuda, former prime minister of Japan, said at the ceremony that he was committed to promoting trade between Japan and China and he believes that with the setting up of the clearing bank, "the efforts had been pushed a step further".
BOC had so far opened 52 interbank RMB clearing accounts for Japanese counterparts in six of its branches in Japan and over 1,100 RMB accounts for Japanese companies, and the average daily RMB settlement amount exceeded 1.8 billion yuan, said Wang Zhe, director of general affairs department of BOC Tokyo Branch.
"We are ready to provide the most experienced and professional services to our Japanese customers," Wang added.
