BOC aims for yuan clearing dominance in Europe

The Frankfurt branch of Bank of China Ltd is hiring around 20 employees and increasing its equity by 1 billion yuan ($160 million) to become the first bank in the 18-nation euro area to clear payments in the Chinese currency.

"The globalization of the yuan is a great opportunity for Chinese banks," Li Guang, the head of Bank of China in Frankfurt, said in an interview. "Look at the success of American banks, which is also partly based on the international dominance of the dollar."

The appointment of a clearing bank is the next step in Frankfurt's path to become an offshore yuan hub after the Bundesbank and the Chinese central bank agreed on March 28 to cooperate in the clearing and settlement of the Chinese currency in Germany's financial capital. Beijing-based Bank of China, the first Chinese bank to enter the German market when it set up a branch in Frankfurt in May 1989, has since been joined by four other major State-owned Chinese lenders as trade builds between the two countries.