ICBC selected to clear yuan transactions in Luxembourg

Industrial and Commercial Bank of China (ICBC) was selected Tuesday to clear yuan transactions in Luxembourg, which aims to become a major trading centre as China expands use of its currency abroad.

The Luxembourg Central Bank said Tuesday in a statement it "welcomes the People's Bank of China's selection of Industrial and Commercial Bank of China (ICBC) Luxembourg Branch as the renminbi clearing bank in Luxembourg".

In the past few months China has designated banks in a number of countries to clear transactions in renminbi, or yuan, as it seeks to make it possible for companies and financial institutions abroad to use its currency in cross-border transactions.

Financial transaction firm SWIFT said Luxembourg is in second place behind London for yuan transactions in Europe, and it aims to be one of the top foreign trading hubs for trading in the Chinese currency.

Luxembourg's low tax rates have helped it attract the European headquarters of numerous multinationals. It already has three Chinese banks operating in the country and another three financial companies plan to set up shop by the end of the year.

China keeps a tight grip on the value of its currency and limits capital flows into and out of the country due to fears they could disrupt the economy, the world's second-largest.

But authorities have moved gradually to liberalise the yuan's movements and allow a more market-oriented exchange rate.