People’s Bank of China Authorizes ICBC Karachi Branch as RMB Clearing Bank in Pakistan

The People’s Bank of China (PBC) has recently announced its decision to authorize the Industrial and Commercial Bank of China (ICBC) Karachi Branch to serve as the Renminbi (RMB) clearing bank in Pakistan, according to a Memorandum of Understanding signed between the PBC and the State Bank of Pakistan (SBP). This development allows for the direct conversion of RMB into Pakistani rupees, bypassing the use of the US dollar, which is expected to save Chinese investors approximately 0.5 million Pakistani rupees per transaction of PKR 10 million.

The implementation of this new financial arrangement has generated a sense of confidence among Chinese investors, who are now more likely to invest in Pakistan, particularly in Gwadar. It has also allayed the concerns of potential Chinese enterprises interested in investing in China-Pakistan Economic Corridor (CPEC) projects, as the unpredictable exchange rate in Pakistan had previously been a major concern.

The deepening economic and trade cooperation between China and Pakistan is entering a new phase of development, with cooperation being established across a wide range of sectors and at multiple levels. The ICBC Karachi Branch, the only Chinese commercial bank in Pakistan, has played a key role in this process, having begun conducting cross-border RMB business locally as early as 2011. In 2014, the branch’s cross-border RMB settlement reached RMB 92.9 billion. As the PBC’s designated RMB clearing bank in Singapore, Luxembourg, Doha, Toronto, and Bangkok, ICBC has established a global RMB clearing business system, which has consistently set new records for clearing volume and improved the efficiency and convenience of RMB transfer worldwide.

Situated at the crossroads of the “One Belt, One Road” overseas routes, Pakistan is a strategically important country in South Asia. The China-Pakistan Economic Corridor has the potential to bring together countries in South Asia, Central Asia, North Africa, and the Gulf through economic and energy resource cooperation, forming an economic resonance and strengthening Pakistan’s position as a bridge between the Eurasian and African continents.

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