MONETABRIEF - The Colombo branch of the Bank of China has been authorized to clear Renminbi transactions between the two countries, Sri Lanka's Finance Ministry said.
The Bank of China will act for the People Bank of China, the Chinese central bank bank.
RMB clearing will reduce transaction costs involved in converting rupees to US dollars and back to Chinese currency, the Finance Ministry said.
The move will strengthen direct links between the banking systems of Sri Lanka and China, the statement said.
Direct clearing will also reduce exchange risk, the statement said.
The RMB clearing facility was officially opened by Deputy Finance Minister Anil Jayantha Fernando on October 15.
India has also been pushing for the rupee to be used for trade between the two countries.
To pay in RMB or Indian rupees for imports, Sri Lanka will also have to have sources of the Chinese currency, which is broadly limited to exports and tourism if Sri Lanka firms are willing to and authorized to accept such payments.
Sri Lanka banks should also be allowed to investment in investment grade (such and government securities) interest bearing instruments in India or China for them to hold the currencies that they buy from exporters or tourists to give to importers when they ask.
Banks also may not be willing to hold much currency of a depreciating currency. (Colombo/Oct19/2026)