China and Türkiye have renewed their currency swap agreement and set up a yuan clearing system in Türkiye to strengthen trade and investment ties.
The updated deal, announced by China’s central bank on June 13, will last three years. It allows currency exchanges up to TRY189 billion (about USD 4.8 billion) or CNY35 billion (about USD 4.9 billion) through local currency swaps. The agreement can be extended after it expires.
China’s People’s Bank of China (PBOC) and Türkiye’s Central Bank first signed a swap deal in 2012 for CNY10 billion (USD 1.4 billion) or TRY3 billion. Since then, they have renewed and expanded the agreement several times.
China began these bilateral currency swaps after the 2008 global financial crisis. These agreements allow countries to exchange currencies for trade, investment, or to support short-term financial market liquidity.
With this extension, the PBOC now has similar currency swap deals with 32 countries and regions, totaling about CNY4.5 trillion (USD 626.4 billion).
China and Türkiye also signed a memorandum to create a yuan clearing system in Türkiye. This system authorizes select Turkish commercial banks to offer yuan clearing services to local banks, businesses, and customers.
Experts say this yuan clearing system will improve cross-border yuan transactions, boost settlement efficiency, and meet demand for local currency trade and investment between the two countries.
China first piloted yuan clearing in Hong Kong and Macau in 2003-2004. Since then, the PBOC has authorized 34 yuan clearing banks across 32 countries and regions worldwide.
