Measures for the Administration of Pilot RMB Settlement in Cross-border Trade

The “Measures” and the “Implementation” stipulate for the first time that some designated and qualified enterprises are allowed to implement the RMB settlement in cross-border trade in the pilot areas.

The authorities determine the list of enterprises according to their qualities and the recommendation from local government. The central bank of China will supervise the whole procedure and control the total amount of pilot RMB settlement.

The announcement of the “Measures” and the “Implementation” represents a substantial step for China’s RMB settlement in cross-border trade and RMB settlement will enter into a new starting point for cross-border trade. The specific arrangements in the “Measures” and the “Implementation” are effective in avoiding the risk of exchange rate fluctuations. They can help RMB to achieve regionalization and internationalization. Meanwhile, the “Measures” and the “Implementation” can also provide enterprises with various kinds of services such as RMB trade financing and export buyers' credit.

In addition, the “Measures” and the “Implementation” also stipulate that the qualified domestic commercial banks are allowed to provide RMB settlement services in cross-border trade in the pilot areas. The qualified commercial banks shall sign the RMB settlement agency agreement with the foreign banks which participate in the cross-border trade. Then the domestic banks need to open bank accounts of the foreign banks for RMB settlement and cooperate with them as their agency. The central bank of China will determine the service scope of RMB settlement and supervise the operation of RMB settlement in cross-border trade.

Chinese banks, which are participating in cross-border trade RMB settlement, will be able to introduce more settlement services such as documentary letter of credit, documentary collection, remittance, pre-receipt and pre-payment. Chinese banks have good opportunities to take advantage in expanding their business scope and improving their abilities to achieve internationalization from these new regulations.

UB & CO. is an international law firm with presence in Greater China and Latin America that provides legal services to local and international clients, including multinational corporations, investment funds, social enterprises, environmental enterprises, NGOs, government organizations and high net worth families and individuals.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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