The State Bank of Pakistan (SBP) Governor Jameel Ahmad has emphasised that Pakistan has strong and long-lasting economic and financial ties with China, and using Renminbi (RMB) for settling cross-border trade and investment transactions can further strengthen these ties.

He was addressing a ceremony on “promoting the use of RMB in Cross-Border Settlement” today, organised by ICBC Bank in the Jinnah Conventional Centre Islamabad to mark the bank’s designation as the RMB clearing agent in Pakistan by the People’s Bank of China (PBoC).

SBP governor elaborated that given the importance of Pakistan’s economic ties with China, the SBP has put in place the required regulatory framework that facilitates the use of RMB in trade and investment transactions, such as opening of L/Cs and availing financing facilities in RMB.

In terms of regulations in Pakistan, RMB is at par with other international currencies, such as the US Dollar, Euro, and Japanese Yen, he asserted.

Both public and private sector enterprises in Pakistan are free to choose RMB for bilateral trade and investment activities, he added.

“As a result of the Central Bank’s efforts to promote the use of RMB in trade with China, RMB-denominated imports of Pakistan from China have increased from about 2% in FY18 to around 18% in FY22,” SBP governor noted.

He also discussed the benefits of the local RMB clearing system and denominating trade in RMB, including fast turnaround time and reduced cost for the local banking system; easy access to the RMB settlement for the local banking system; improved and more competitive pricing of bilateral trade transactions; and opening up of new markets for Pakistani businesses.

SBP Governor also urged banks to play an important role by providing their customers with the necessary information pertaining to the regulatory framework in China to conduct transactions in RMB.

Published in The Express Tribune, October 28^th, 2023.

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