In a move aimed at making transfer of funds easy for reviving Chinese-backed projects in Pakistan while avoiding the complications of a US dollar international system, Pakistan and China on Wednesday signed an agreement for RMB clearing arrangements. In this regard, a memorandum of understanding (MoU) was signed between the State Bank of Pakistan and the Peoples Bank of China (PBoC). From Pakistan, the accord was signed by SBP Governor Jameel Ahmad, while from the Chinese side, the accord was inked by PBoC Governor Yi Gang.
The establishment of an RMB clearing arrangement in Pakistan will further boost usage of RMB for cross-border transactions among Chinese and Pakistani enterprises and financial institutions. This will also promote bilateral trade and investment between the two countries. The establishment of an RMB clearing unit in the country means that Pakistan may no longer have to use its precious reserves of US dollars to trade with China.Moreover, when funding China-backed mega projects in the country, China too will not have to rely on sending Pakistan US dollars.
