BANK of China Ltd.’s Sydney branch is set to win regulatory approval to begin clearing trades in Chinese yuan, according to sources with direct knowledge of the issue, paving the way for Australia to become an offshore hub for the Chinese currency.

    The sources said China’s central bank will award the mandate to Bank of China (BOC), the country’s fourth-largest bank by market capitalization and the world’s biggest player in cross-border yuan transactions.

    Yuan clearing banks not only make cross-border yuan payments more timely and convenient, but increase the awareness of yuan usage among local companies and help yuan deposits accumulate in a country.

    Reserve Bank of Australia (RBA) Deputy Governor Philip Lowe said in July that the central bank was working with the People’s Bank of China (PBOC) on a memorandum of understanding that would allow a clearing bank to be selected this year.

    (SD-Agencies)