China adds currencies to yuan clearing system
China has expanded its onshore central clearing system to incorporate three foreign currencies, aiming to boost direct trading with the yuan. The Shanghai Clearing House initiated central counterparty services for spot trades involving the Singapore dollar, New Zealand dollar, and Thai baht starting September 14. Twelve banks participated in the inaugural session, with the clearing house handling 996 million yuan ($148 million) in transactions.
The settlement provider stated that the addition of these currency pairs will bolster foreign-exchange services aligned with the Belt and Road Initiative. The Shanghai Clearing House, operating under authorization from the People’s Bank of China, already offers central clearing for the yuan against the dollar, euro, pound, Australian dollar, and yen.
To encourage lower trading costs, the clearing house will waive clearing fees for the three new currencies through the end of 2028. Central clearing minimizes counterparty credit risk and enhances balance-sheet efficiency by consolidating transactions that would otherwise be settled individually.
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