BUDAPEST - Hungary's central bank said it had signed an agreement on Saturday with the People's Bank of China to allow Chinese currency clearing in Hungary.
Hungary follows a number of countries that have appointed a clearing bank to enable trade with China to be settled in China's yuan currency, also known as the renminbi, which is not fully convertible.
The Chinese central bank will designate a bank to launch yuan clearing in Hungary, the National Bank of Hungary (NBH) said in a statement. It will also expand its scheme that allows investment in Chinese shares and other securities.
"The People's Bank of China also decided to extend the pilot scheme of RMB Qualified Foreign Institutional Investors (RQFII) to Hungary with a total investment quota of 50 billion yuan," the National Bank of Hungary said.
Under the memorandum of understanding, the Hungarian central bank will also invest in China's interbank bond market.
"The investment in China's bond market will help the NBH diversify its investment portfolio and strengthen liquidity management," the NBH said.
It said the agreement aimed to support the use of the yuan in cross-border transactions by companies and financial institutions, and facilitate bilateral trade.