OTTAWA, March 23 (Reuters) - Canada’s export agency signed a deal with China’s biggest bank on Monday to promote the use of the yuan as a settlement currency in trade-related transactions, as officials in Toronto prepared to launch the first yuan trading hub in the Americas.
Export Development Canada (EDC) signed the memorandum of understanding with the Canadian subsidiary of Industrial and Commercial Bank of China Ltd, the hub’s clearing bank.
The two institutions will be “looking at ways to make the transactional aspect of Canadian and Chinese trade a little less cumbersome,” EDC Senior Vice President Mairead Lavery said in a statement.
The trading hub and clearing center was scheduled to launch later on Monday in Toronto.
Canadian banks currently have to convert from Canadian dollars into U.S. dollars before settling trade payments in yuan. The trading hub will eliminate costs to clients by enabling settlements to be made directly in yuan.
The Canadian Chamber of Commerce estimated in November that the trading hub could boost Canadian exports to China by C$32 billion ($25.44 billion) over the next decade, and cut Canadian importers’ costs by as much as C$2.75 billion.
The Canadian Chamber of Commerce full statement can be seen at: bit.ly/1x9ruqz
EDC said it was already conducting more business in yuan as demand for exposure to the currency increases. On March 16, it issued a 1 billion yuan ($161.19 million) bond, which it said was purchased by central banks within hours.
($1 = 1.2577 Canadian dollars)
$1 = 6.2037 Chinese yuan renminbi Reporting by Randall Palmer; Editing by Jeffrey Hodgson and Chris Reese